Does New Jersey excuse performance when the force majeure event hits?
For a sale of goods, yes on the statutory terms: delay in delivery or non-delivery by a seller who complies with the allocation and notice paragraphs is not a breach if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made, or by good-faith compliance with any applicable foreign or domestic governmental regulation or order, whether or not it later proves invalid. Excuse is conditional: where the contingency affects only part of the seller's capacity, the seller must allocate production and deliveries among customers in a fair and reasonable manner, and must seasonably notify the buyer of the delay or non-delivery and of any quota. The section is also "subject to the preceding section on substituted performance": where agreed facilities or carriers fail or the agreed manner of delivery becomes commercially impracticable but a commercially reasonable substitute is available, "such substitute performance must be tendered and accepted" (§ 12A:2-614(1)). And the buyer has the next move: on notice of a material or indefinite delay or an allocation, the buyer may by written notice terminate the unexecuted portion or take its quota in substitution; if the buyer does not modify within a reasonable time not exceeding thirty days, the contract lapses as to the affected deliveries; and that section "may not be negated by agreement" except where the seller has assumed a greater obligation (§ 12A:2-616).
The trap
Two things follow that drafters miss. First, § 12A:2-615 opens 'Except so far as a seller may have assumed a greater obligation'. A contractual guarantee of supply displaces the statutory excuse, so to the extent the seller has assumed a greater obligation the statutory excuse yields to it; whether a given delivery warranty is such an assumption is not resolved by any New Jersey authority we hold. Second, the excuse comes with duties: a seller who stops shipping without allocating fairly among customers, or without seasonable notice, loses it. Note this rule states the GOODS rule only. We could not verify a New Jersey Supreme Court force-majeure or common-law impracticability rule for services or leases: a full-text scan of every New Jersey Supreme Court opinion checked for this rule found the phrase 'force majeure' in none.
5 authorities
- statuteN.J. Stat. Ann. § 12A:2-615enactment date not established
The words that state the rule
(a) Delay in delivery or non-delivery in whole or in part by a seller who complies with paragraphs (b) and (c) is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation or order whether or not it later proves to be invalid.
- statuteN.J. Stat. Ann. § 12A:2-615enactment date not established
The words that state the rule
Except so far as a seller may have assumed a greater obligation and subject to the preceding section on substituted performance:
- statuteN.J. Stat. Ann. § 12A:2-615enactment date not established
The words that state the rule
(b) Where the causes mentioned in paragraph (a) affect only a part of the seller's capacity to perform, he must allocate production and deliveries among his customers but may at his option include regular customers not then under contract as well as his own requirements for further manufacture. He may so allocate in any manner which is fair and reasonable. (c) The seller must notify the buyer seasonably that there will be delay or non-delivery and, when allocation is required under paragraph (b), of the estimated quota thus made available for the buyer.
- statuteN.J. Stat. Ann. § 12A:2-614enactment date not established
The words that state the rule
(1) Where without fault of either party the agreed berthing, loading, or unloading facilities fail or an agreed type of carrier becomes unavailable or the agreed manner of delivery otherwise becomes commercially impracticable but a commercially reasonable substitute is available, such substitute performance must be tendered and accepted. (2) If the agreed means or manner of payment fails because of domestic or foreign governmental regulation, the seller may withhold or stop delivery unless the buyer provides a means or manner of payment which is commercially a substantial equivalent. If delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the buyer's obligation unless the regulation is discriminatory, oppressive or predatory.
- statuteN.J. Stat. Ann. § 12A:2-616enactment date not established
The words that state the rule
(1) Where the buyer receives notification of a material or indefinite delay or an allocation justified under the preceding section he may by written notification to the seller as to any delivery concerned, and where the prospective deficiency substantially impairs the value of the whole contract under the provisions of this Chapter relating to breach of installment contracts (12A:2-612), then also as to the whole, (a) terminate and thereby discharge any unexecuted portion of the contract; or (b) modify the contract by agreeing to take his available quota in substitution. (2) If after receipt of such notification from the seller the buyer fails so to modify the contract within a reasonable time not exceeding thirty days the contract lapses with respect to any deliveries affected. (3) The provisions of this section may not be negated by agreement except in so far as the seller has assumed a greater obligation under the preceding section.
“Defective” means that reading found something to correct. What you are reading is the rule as it stands after that reading.