Saleel Sabnis, Esq.
October 7, 2020
What is the term force majeure mean and why is it relevant today?
It is a french term for “superior force.” Today, the term force majeure refers to a clause that can allow a person or business to “excuse” themselves from a contract. Think of a force outside the control of a contracting party (like the current pandemic). If there’s an act of force majeure, then the obligatory performance is excused if the performance is affected by that act. Boiled down: If something unpredictable occurs, a contract may be voided. The key to a force majeure event is its unpredictability. If an unfortunate event or disaster was something that you could and should have prepared for, it’s nearly impossible to invoke the clause.
What are acts which fall under the force majeure provision?
Contracts with this clause usually list the laundry list of potential calamities. If any of those occurrences transpire, a contracted party is allowed to back out of the deal with no penalty. For example:
- “Acts of God,” (weather related, floods, earthquakes, hurricanes, fires)Acts of war
- Acts of terrorism
- Acts of government authorities
- Other causes beyond the reasonable control of a party and increasingly epidemics/pandemics
Where would one see these type of clauses?
Force majeure clauses are usually a part of a business-to-business contract. Commercial leases and development projects often include these clauses, and those clauses may be increasingly invoked due to COVID-19. It’s not difficult to imagine why this is the case; businesses during this pandemic potentially can’t use their space due to the pandemic and other associate governmental closings. Construction firms could invoke the clause if they are unable to meet deadlines or milestones on a development project. Force majeure clauses vary. Some may have clauses with the word “epidemic,” but may not include word “pandemic.” Expect a change after the coronavirus outbreak. Moving forward, “pandemics” and “epidemics” are going to be common terms in such clauses.