Force majeure is a fancy term that means “superior force” and it comes from French law. It refers to events that no one can predict, like natural disasters, wars, sudden changes in laws, or surprise pandemics like COVID 19, that stop people from following through on their contracts. Knowing about force majeure helps businesses avoid big risks and losses when these things happen. It makes sure that no one gets unfairly punished for things they can’t control.
Key Elements of a Force Majeure Clause
- What Counts as a Force Majeure Event
The clause may clearly state or vaguely suggest what events are considered force majeure. This helps everyone understand what types of events are covered. The list of events is typically presented as non-exhaustive to account for unforeseen events that may not have been initially anticipated. - Cause and Effect
The event must directly cause the problem. For example, if the Russia-Ukraine war (force majeure event) stops me from sending a shipment, that’s the cause. - Trying to Reduce the Impact
Everyone needs to make reasonable efforts to lessen the problem. This might mean finding a new delivery route or supplier. - Telling the Other Party
If something goes wrong, the affected party must tell the other side quickly. The clause might say when this should be done by. - What Happens to the Contract
The clause should explain whether the contract will be paused, changed, or ended. - What if Only Part of the Job Can Be Done
If some things can still be completed, the clause should explain what happens next.
A force majeure clause is like a safety net for businesses, protecting them from unpredictable events that could disrupt their plans. By clearly defining what counts as a force majeure event and setting expectations for communication and actions, businesses can navigate tough situations with less stress and avoid unfair penalties. With the right protections in place, everyone knows where they stand when the unexpected happens.
Philipa N. A. Sima Nuamah on behalf of OSD and Partners. [email protected]
