General Contract Clause: Force Majeure Explained

When it comes to creating a contract, parties must anticipate unforeseeable events that may prevent them from fulfilling their obligations under the agreement. This is where the general contract clause force majeure comes into play. In this article, we will discuss what a force majeure clause is and why it is essential for any contract.

What is a Force Majeure Clause?

A force majeure clause is a contractual provision that excuses a party’s non-performance when certain events beyond their control occur. These events can include natural disasters, war, terrorism, strikes, and other unforeseen events that make it impossible for one or both parties to fulfill their obligations.

For example, suppose a supplier is contracted to deliver goods to a buyer. In that case, the supplier may be excused from fulfilling their obligation if their production facility is damaged by a natural disaster such as a hurricane or earthquake, making it impossible to manufacture and deliver the goods.

Why is a Force Majeure Clause Important?

Including a force majeure clause in a contract is essential as it reduces the risk of disputes arising between the parties due to unforeseeable events. Without a force majeure clause, the parties may be forced to perform their obligations even during events beyond their control, leading to breach of contract and legal liabilities.

Additionally, a force majeure clause gives parties the opportunity to negotiate the terms of the clause and determine what events will be considered force majeure events. This can be essential for businesses operating in specific industries that are more vulnerable to certain events such as those in coastal regions that are prone to hurricanes.

What Should a Force Majeure Clause Include?

When drafting a force majeure clause, parties should ensure that it is clear and specific. It should clearly outline what events will be considered force majeure events, how they will impact the contract, and the procedures that need to be followed in the event of a force majeure event occurring.

Additionally, parties should ensure that the clause adequately protects their interests. For instance, the clause may state that in the event of a force majeure event occurring, the affected party will be entitled to an extension of time to fulfill their obligations under the contract. Parties may also consider including a provision for termination of the contract if a force majeure event persists for a specified period.

Conclusion

In conclusion, a force majeure clause is a fundamental provision that should be included in any contract. It provides parties with protection against unforeseeable events and allows them to negotiate the terms of the clause to ensure that their interests are adequately protected. As a professional, it is essential to ensure that force majeure clauses are well-written and specific, making them easier for the parties involved to understand.