This information is provided for educational purposes only.
A Force Majeure clause is a boiler plate clause that is included in most contracts. It’s a clause that excuses one or both parties from fulfilling their obligations under the contract when an uncontrollable and unforeseen event, often referred to as an “Act of God” or “Force Majeure Event,” makes performance impossible or impractical, essentially relieving the party(ies) from liability for not fulfilling obligations under the contract due to circumstances beyond their control.
Force majeure clauses have always been prevalent in contracts, but they were oftentimes overlooked. Force majeure clauses started getting a lot of attention when Covid hit, especially in the United States because of government mandated shutdowns. The pandemic caused tons of businesses to abruptly shut down, corporate and personal events had to be canceled, everything came to a screeching halt. A lot of businesses, freelancers, clients, and individuals leaned on Force Majeure clauses in contracts to relieve themselves of any contract obligations that they may not have been able to perform due to impacts from the global pandemic.
The pandemic brought to light how important having a force majeure clause in your contract can be. It’s also very important to understand the force majeure language and its potential impacts.
What is a Force Majeure Clause in a Contract?
The Force Majeure clause generally contains a detailed list of qualifying situations and extraordinary events that prevents one of both parties from fulfilling obligations under the contract. The qualifying events excuse performance and constitute force majeure. They generally cover “Acts of God”, war and terrorist attacks, strikes, fire, floods, earthquakes and, more recently, pandemics and epidemics. The clause may specify that the covered party is released from its commitment to perform contractual obligations under the contract. Or that contract obligation fulfillment may be delayed until a time when fulfillment is possible.
Common Force Majeure Clauses
Force majeure clauses are often referred to as “boilerplate” because they mostly consist of similar language in most, if not all, contracts. Below are examples of force majeure clauses in client contracts.
Force Majeure Clause Example 1
“No party shall be liable or responsible to the other party, nor be deemed to have defaulted under or breached this contract, for any failure or delay in fulfilling or performing any term of this contract (except for any obligations to make payments to the other party hereunder), when and to the extent such failure or delay is caused by or results from acts beyond the impacted party’s (“Impacted Party”) control, including, but not limited to, the following force majeure events (“Force Majeure Events”): (a) acts of God; (b) a natural disaster (fires, explosions, earthquakes, hurricane, flooding, storms, explosions, infestations), epidemic, or pandemic; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) government order or law; (e) actions, embargoes or blockades in effect on or after the date of this Agreement; (f) action by any governmental authority; (g) national or regional emergency; (h) strikes, labor stoppages or slowdowns or other industrial disturbances; and (i) shortage of adequate power or transportation facilities.
The Impacted Party shall give Notice within five (5) days of the Force Majeure Event to the other party, stating the period of time the occurrence is expected to continue. The Impacted party shall use diligent efforts to end the failure or delay and ensure the effects of such Force Majeure Event are minimized. The Impacted party shall resume the performance of its obligations as soon as reasonably practicable after the removal of the cause. In the event this Agreement is terminated due to the impossibility of the Impacted party to cure its performance obligations, such payments shall be credited to Client’s account and must be used within twelve (12) months from the date of notice of the Force Majeure Event or such fees will be liquidated by Photographer.
Force Majeure Clause Example 2
Neither Client nor Designer will be liable to the other for any failure to comply with any terms of this Agreement to the extent that the failure is caused directly or indirectly by acts of nature, fire, government restrictions or other government acts, injunction or other labor problems, riots, acts of terrorism or threats of terrorism, war (whether or not declared), or other causes beyond the control of or without fault of either party (each, a “Force Majeure Event” or “Act of God”).
Force Majeure Clause Example 3
Neither Party shall be deemed in breach of this Agreement if the Services are unable to be completed because of a fire, earthquake, flood, hurricane, or other severe weather, labor dispute, act of war, terrorism, riot or other severe civil disturbance, death, illness, or incapacity of C. Wayman, or any local, state, federal, national, or international law, governmental order, or regulation, or any other event beyond the control of either Party (collectively, “Force Majeure Event”).
Upon occurrence of a Force Majeure Event, the invoking Party shall give notice to the other Party of its inability to perform or of delay in performance of the Services.
The Force Majeure Clause Provides Financial Protection
A force majeure clause provides protections for both contracted parties, but most particularly for the business side. It allows the business to excuse themselves from its contracted obligations entirely or until the force majeure event is resolved, depending on how the clause is worded. The business is usually allowed to keep its retainer, deposit, or otherwise predetermined percentage of full payment if it is forced to cancel its work; again, this depends on the contract language. The clause can also protect the client in a similar way by releasing them from obligations for the full payment of the contracted work or service if an unforeseeable situation arises.
The tricky part about force majeure clauses is that they are so very specific. A qualifying event must be explicitly listed in the clause and must be directly responsible for your inability to meet the contract obligations. In general, most courts require that qualifying force majeure events make it legally or physically impossible to meet contract obligations. The events can’t merely cause an inconvenience or economic restraint on either party.
Can You Claim Force Majeure Without A Clause?
The simple answer is no, you cannot invoke “force majeure” as a way to get out of obligations of a contract if there is no force majeure language in the contract you signed. With that said, there may be other doctrines of law that you may be able to invoke and/or rely on as a work around, depending on the circumstances. You may be able to rely on the doctrine of impossibility of performance if, because of unforeseeable circumstances, it is impossible to uphold your end of the contract.
Invoking force majeure requires there to be a force majeure clause in your contract. It’s important to include specific and all encompassing (as much as possible) force majeure language in your contract(s) so that you have a written clause outlined in the contract that explains what happens when unforeseeable events occur that makes it impossible for either party to perform its obligations under the terms of the contract.
Are your contracts up-to-date with the strongest force majeure clause possible? Do you know what’s included in your clause and what it means? If not, contact me at [email protected] for assistance in updating your contracts.
