Dictionary

  • Force majeure clause

    French for ‘superior force’. A contractual clause excluding liability where a party’s failure to perform is caused by forces beyond the party’s control, i.e. an ‘act of God’. Force majeure clauses can protect parties from having to perform their contractual obligations where the event in question renders performance inadvisable, commercially impracticable, illegal, or impossible. For the duration of a force majeure event, contractual obligations will be put on hold. Once the event concludes, the obligations and the contract recommence.

    Force majeure clauses do not excuse payment of monies owed. They will usually include a non-exhaustive list of examples of force majeure events, the most common which is natural disasters. Force majeure clauses sometimes specify a requirement that the other party be notified of the force majeure event and its impact on performance and duration. Force majeure clauses may also include a provision for termination by either party where the force majeure event continues for a certain amount of time, or prevents performance altogether.

    The purpose of a force majeure clause is to postpone contractual obligations so as to prevent a breach of contract, or a frustration of contract. Force majeure clauses are used in almost all modern contracts for services. Parties to contracts without force majeure clauses risk action for breach of contract, despite having no control over the situation. However, force majeure clauses do not excuse all breaches. The event must be unforeseen and the party affected must take reasonable steps to reduce the duration and impact on the contract.

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