Contracts are built on the principle of certainty. Each party promises to perform certain obligations, and in return, expects the other party to uphold theirs. But what happens when an unexpected, uncontrollable event makes performance impossible or impractical? This is where the force majeure clause steps in.
The force majeure clause, often tucked away toward the end of contracts, plays a crucial role in protecting parties from liability when circumstances go beyond their control. In today’s interconnected world—where global pandemics, extreme weather events, wars, and government regulations can disrupt business overnight—understanding this clause is more important than ever.
What Is the Force Majeure Clause?
The term force majeure originates from French, meaning “superior force.” In legal terms, it refers to events that prevent one or both parties from fulfilling their contractual obligations, despite their best efforts.
The clause acts as a safety net, excusing performance—either temporarily or permanently—when unforeseen circumstances arise. It is not an automatic principle under common law; instead, it must be expressly included in the contract. In civil law jurisdictions, however, force majeure may have a statutory basis, though parties still often define it contractually for clarity.
Scope of Force Majeure
A well-drafted force majeure clause usually lists the kinds of events that qualify. Common inclusions are:
- Natural events: earthquakes, floods, hurricanes, wildfires.
- Human events: labor strikes, riots, terrorist attacks, wars.
- Government actions: export bans, trade restrictions, lockdowns.
- Health-related events: epidemics and pandemics (COVID-19 being a recent example).
On the other hand, courts typically exclude:
- Economic hardship or financial difficulty. A business being less profitable or unable to afford performance is usually not considered force majeure.
- Events caused by negligence. If the party could have prevented the event, it cannot rely on this clause.
- Foreseeable risks. If the event was reasonably predictable, courts may refuse to excuse performance.
Thus, the scope of the clause depends heavily on how it is drafted.
Key Provisions in a Force Majeure Clause
While wording varies across industries and agreements, most effective clauses include several essential components:
- Definition of Events
The clause should clearly define what constitutes a force majeure event. Some contracts provide an exhaustive list, while others include both a list and a general “catch-all” phrase like “any other event beyond the reasonable control of the parties.” - Notice Requirements
The affected party usually must notify the other in writing within a specified time. For example: “The affected party shall notify the other within 10 days of the occurrence of a force majeure event.” This ensures transparency and allows the unaffected party to plan accordingly. - Duty to Mitigate
Parties must take reasonable steps to minimize the impact. For instance, a supplier affected by port closures may seek alternative shipping routes. A clause that expressly requires mitigation prevents abuse of the provision. - Consequences of the Event
The clause should clarify what happens when a force majeure event occurs:- Suspension of obligations: duties are paused until the event subsides.
- Extension of time: deadlines may be extended proportionally.
- Termination rights: if the event persists beyond a set period (e.g., 90 days), either party may terminate the contract without liability.
- Governing Law
Since interpretation varies between jurisdictions, contracts often include a governing law clause. Courts in different countries interpret force majeure differently—making this choice critical in cross-border agreements.
Judicial Interpretation & Case Law
Courts approach force majeure cautiously, emphasizing strict interpretation. The party invoking the clause bears the burden of proof. They must demonstrate:
- The event qualifies under the clause.
- The event directly prevented performance.
- Reasonable steps were taken to mitigate.
For instance, during COVID-19, courts worldwide faced disputes over whether lockdowns constituted force majeure. In many jurisdictions, the answer depended on whether “epidemics” or “government orders” were expressly mentioned in the contract. Where they were absent, courts often rejected the defense.
This demonstrates why general catch-all language may not be sufficient without specific examples.
Practical Tips for Drafting and Negotiation
- Be Specific: Tailor the clause to the industry. A technology company may want to include “cyberattacks” while a construction company may focus on “shortages of raw materials.”
- Balance the Risks: Ensure the clause does not overly favor one party. For instance, termination rights should be mutual.
- Include Notice and Mitigation Requirements: This encourages cooperation rather than abrupt disruption.
- Define the Consequences Clearly: Parties should know whether obligations are paused, extended, or terminated.
- Review Regularly: Global risks evolve—pandemics, climate change, and cyber threats were once rare considerations but are now common. Update clauses accordingly.
Conclusion
The force majeure clause is far more than boilerplate language—it is a vital risk management tool. When drafted thoughtfully, it protects both parties from unforeseen disruptions without shifting undue burden.
Recent events like COVID-19, natural disasters, and geopolitical conflicts have shown just how important it is to have a clear, enforceable force majeure clause in every contract. Businesses that treat it as an afterthought risk being left unprotected when “superior forces” intervene.
In short: define, notify, mitigate, and clarify consequences. These four steps make the difference between a clause that works in practice and one that fails when needed most.
