The past year has seen the cancellations of many conferences, expos, festivals, weddings, concerts and other events. More than ever, we have learned that we must prepare for derailment by uncontrollable or outside forces. The legal term for this is the “force majeure clause.”
The force majeure clause, French for “superior force,” is a contract provision that excuses the involved parties from performing their contractual obligations due to certain circumstances beyond their control.
In other words, the clause exists to protect companies or people from legal action for not performing their duties under their general contract in the case of possible contingencies. According to JD Supra, without the force majeure clause, parties to a contract are left to rely on undependable common law doctrines of “impracticability/impossibility of performance” and “frustration of purpose,” which are seldom used and rarely successful.
Instead of depending on common law, businesses and organizations would benefit from a carefully negotiated force majeure clause. Key elements that should be addressed are:
- Specify all circumstances in which the clause would come into action. LexisNexis points out that parties often mistakenly tack on a general clause without adding specifics to their industry. The provision should include a comprehensive list of all the events that could lead to a halt or obstacle in performance, including large-scale scenarios like natural disasters, civil disorder and medical epidemics to market-specific situations like labor strikes, legal developments and occupational injuries.
- Pay attention to restrictive language. Another common oversight in writing a force majeure clause is using boilerplate language, according to Venable LLP. This would consist of writing that the clause only comes into action when performance is “impossible.” This is a very high threshold and can be difficult to argue legally. It is imperative to identify and clearly define the effects an event might have on performance.
- Protect yourself from underperformance. Sometimes, even in events that force majeure clauses can be applied for cancellation, parties decide to continue their operation anyway. UpCouncil suggests including language for not only non-performance but also underperformance.