What Is Force Majeure?
No one ever wants to consider the possibility of a force majeure event. In case you’re unfamiliar, it is a legal term used to describe an unforeseeable and unavoidable event that impedes or prevents a party from fulfilling its contractual obligations. In other words, it’s something that no one could have seen coming and nothing can be done about it. Most contracts will include some sort of clause stating how each party should act in the event of a force majeure, as well as what kind of remedies will be available. In this post, we’ll explore why having a clear understanding of force majeure is important, what to look out for in contracts, and how to mitigate risks in the event of a force majeure.
What is force majeure?
A force majeure event is an unpredictable or unforeseeable circumstance that prevents someone from fulfilling a contract. Force majeure is often invoked when natural disasters or other events beyond the control of the parties make it impossible to fulfill the terms of a contract.
When one party to a contract invokes force majeure, it is typically for the purpose of excusing themselves from liability if they are unable to perform their obligations under the contract. For example, if a party to a contract is unable to delivery goods due to a force majeure event, they may be excused from liability for breach of contract.
There are a few things to keep in mind if you’re invoking force majeure in order to get out of a contract:
First, check the language of your contract. Many contracts will have specific language addressing force majeure events and what constitutes grounds for invocation.
Second, even if your contract doesn’t specifically address force majeure, you’ll still need to prove that the circumstances preventing you from performing were truly unforeseeable and beyond your control. Simply being unable to fulfill your obligations due to financial difficulties will not be enough.
Third, even if you are able to invoke force majeure and excuse yourself from liability, that doesn’t mean you’re off the hook entirely. You’ll still need to work with the other party to find an alternate way to fulfill your obligations under the contract.
What are some examples of force majeure?
A force majeure event is an event that is beyond the control of the parties involved in a contract. The most common examples of force majeure events are natural disasters, such as hurricanes, earthquakes, and floods. Other examples of force majeure events include war, terrorist attacks, and pandemics.
Force majeure clauses are often included in contracts in order to protect the parties from liability in the event that a force majeure event occurs. In some cases, the clause may excuse the party from performing its obligations under the contract. In other cases, the clause may allow the party to delay or suspend its performance under the contract.
It is important to note that not all events that occur outside of the parties’ control will be considered force majeure events. For example, a change in government regulations would not typically be considered a force majeure event. Similarly, a party’s financial difficulties would not typically be considered a force majeure event.
What are the consequences of force majeure?
A force majeure event can have serious consequences for a business. If a business is unable to perform its contractual obligations due to a force majeure event, it may be in breach of contract. This could lead to the other party terminating the contract and suing for damages. In some cases, a court may find that the force majeure event excuses the non-performing party from its contractual obligations altogether.
How can you protect yourself from force majeure?
There are a few steps that you can take to protect yourself from force majeure. First, you should try to identify all of the potential risks that could trigger a force majeure clause. This includes things like natural disasters, political unrest, and civil disobedience. Next, you should assess the likelihood of each of these risks occurring. Finally, you should put together a plan to mitigate the effects of force majeure if it does occur. This might include things like having an emergency fund to cover unexpected expenses or having a backup plan for your business operations.
Force majeure is a legal concept that allows parties to be relieved of certain contractual obligations if certain unforeseeable events occur. It serves as an important tool for contract drafters, ensuring that contracts are not unduly burdensome and allowing both sides to prepare adequately in case of any unforeseen events. As such, it is important that all parties understand what force majeure entails and how it can apply in their particular situation so they can make informed decisions about the terms of their agreement.