In the business world, at some point, you will likely encounter the term, force majeure. Are you curious about what force majeure is? If so, you are in the right place.
Force majeure is a clause included in some contracts. The term “force majeure” is French and translates to “greater force.” When you see force majeure in a contract, its purpose is to remove liability for unavoidable and unforeseeable situations that impact and interrupt the expected events that prevent those included in the contract from meeting their outlined obligations.
Are you wondering what a force majeure event is? If so, it includes mostly natural disasters like earthquakes, tornadoes, and hurricanes. It may also be used to cover some human actions, including man-made diseases and armed conflict.
- Force majeure is a clause in contracts designed to remove liability for some unavoidable catastrophes that impact business events and fulfillment of obligations.
- The force majeure clause can also cover natural disasters and some human catastrophes.
Now that you understand the basics of a force majeure clause, it’s important to understand what this clause will contract. Below, you can find some force majeure contract example clauses and how they apply to business situations and those who have signed the contract.
What is a force majeure event?
Essentially, force majeure is related to the idea of an “act of God.” These are events that no person or party can be responsible for, like a tornado or hurricane. However, the term also extends to some human actions, like armed conflict.
In a law firm, lawyers can plan and manage predicted events using legal calendaring software. When things get off track due to one party’s failure to meet contract obligations, it is often considered a “breach of contract.” In these situations, it is possible for the wronged party in the contract to file a lawsuit against the one that did not uphold their end of the bargain. However, if a force majeure clause is included in the contract, and the party did not fulfill their obligations due to an “act of God,” they cannot be held legally responsible for it.
In most cases, for an event to be considered force majeure, it must be an unforeseeable event. This means they are not caused by the parties who have entered a contract. The concepts are defined and applied in unique ways based on the jurisdiction of your business.
- Force majeure covers an “act of God” and some human-caused situations.
- When force majeure is included in a contract, the party that did not meet its contractual obligations cannot be legally responsible for this.
To ensure that you know if you have the clause in your contract, it’s important to keep copies and ensure they are where you can find them when the need arises. An effective way to do this is by investing in legal document management software.
What is a force majeure contract example
Below is an example of when the force majeure clause would come into play:
- An avalanche hits a factory in the French Alps and destroys the operations. The factory is responsible for supplying your vendor with the unique product that you must have for your business to operate. The avalanche resulted in shipment delays, and you decided to move forward and file a lawsuit.
In this situation, if a force majeure clause is included in the contract with your vendor, they can use it as a defense. The argument would be that the avalanche was an external, unavoidable, and unforeseeable event. These three factors must be present for the clause to apply to the situation.
The exception to this would be if the contract included an avalanche, thus removing the supplier’s liability. In this situation, if you take legal action against them, the court may determine that the supplier does owe damages to the other party.
It is worth noting that if a disaster has occurred in a location in the past, even if it is years before, if it happens again, it may not be considered unforeseeable.
Keeping your legal documents organized and available
Legal documents, like contracts, are a crucial part of any business. Investing in legal communication management services may be beneficial to help you handle matters like the ones described above in a timely manner. You will find that using matter management software is a great way to stay organized and ensure that the desired results are achieved when it comes to legal documents and other matters.
If you are ready to implement the right tools, including legal client intake management, to help ensure your legal practice remains competitive, request a demo of CloudLex today.
