Force Majeure Matters: Split Fifth Circuit Decision Reminds Energy Contract Drafters That Such Clauses Have Serious Consequences
While attorneys frequently treat
While hurricanes might seem an obvious case of force majeure, Ergon argued that the clauses in its contracts with Dynegy excused Dynegy's performance only if Dynegy could not remedy the force majeure event with the exercise of due diligence. Because the contracts were general supply contracts, rather than contracts for delivery of gas from a specific source, Ergon argued that Dynegy could have met its delivery obligations by purchasing replacement gas on the open market. Ergon therefore sued, seeking to recover the cost it incurred to cover gas deliveries not made by Dynegy while Dynegy claimed force majeure from the hurricanes.