Force Majeure Clauses: What They Cover and Why They Matter
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Force majeure clauses excuse contractual performance during events beyond a party's control. After the pandemic, these clauses receive more scrutiny than ever.
What Is Force Majeure?
Force majeure (French for "superior force") is a contract provision that frees both parties from liability when an extraordinary event prevents performance. Typical events include natural disasters, pandemics, war, government actions, and infrastructure failures. The specific events covered depend entirely on the contract language.
Post-COVID Considerations
After COVID-19, many contracts now explicitly include "pandemic" and "epidemic" in their force majeure lists. Courts are also more willing to scrutinize these clauses. Ensure your clause is broad enough to cover unforeseen events while requiring the affected party to mitigate the impact.
What to Negotiate
Include a broad catch-all in addition to the specific list. Define notice requirements and the time period after which either party can terminate. Clarify whether financial hardship qualifies (it usually does not). Require the affected party to resume performance as soon as reasonably possible.