Conscious Decision is Not Force Majeure

Posted: 8th August 2011

Force majeure is the term used when something unexpected and not preventable occurs which radically changes a situation. A force majeure clause is often included in contracts to guard against the position in which a contract cannot be fulfilled because an event occurs which prevents it (wars and natural disasters are the most usual).
It also exists as a concept in some tax legislation and was recently argued to apply by a supplier of pick-up trucks who had earlier attempted to obtain a refund when VAT was charged at the wrong rate on its imports. It had fought the issue through the VAT Tribunal and lost. It then decided not to appeal that decision.
However, some years later, a ruling by the European Court of Justice confirmed that the supplier’s view regarding the appropriate rate to apply was correct. It applied for a VAT refund, but this was rejected as being out of time (there is a three-year limit on such claims).
The supplier argued that force majeure applied and that this had prevented it from making the application for repayment in time. This argument was rejected, however. The conscious decision of the supplier to not take a given course of action because it believed its claims would fail could not be described as force majeure.