Force Majeure
A contract clause that frees both parties from liability when an extraordinary event beyond their control prevents one or both from fulfilling their obligations. Often called an "Act of God" clause.
Explanation
Force majeure clauses allocate risk when unforeseen events make contract performance impossible or impractical. These provisions became prominent during COVID-19 when businesses worldwide faced unprecedented disruptions.
For force majeure to apply, the event typically must be: beyond the parties' control, unforeseeable at contract formation, and the actual cause of non-performance. Simply making performance more difficult or expensive usually isn't enough—it must be impossible or illegal.
Contract language matters enormously. Some clauses list specific triggering events (war, natural disaster, government action), while others use broader language. Courts interpret these clauses strictly, so general terms like "unforeseen circumstances" may not cover pandemics unless explicitly mentioned or clearly qualifying.
Real-World Examples
Pandemic-Related Force Majeure
A concert venue contracts with artists for a summer tour in 2020. Government lockdowns prohibit large gatherings.
If the contract includes pandemic or government action in its force majeure clause, both parties may be excused from performance without liability for the cancelled shows.
Natural Disaster
A supplier agrees to deliver goods from a warehouse that is destroyed by a hurricane. The contract has a standard force majeure clause covering natural disasters.
The supplier can invoke force majeure for the delay or non-delivery. They must still perform once reasonably possible, perhaps from alternative facilities, but aren't liable for the hurricane-caused delays.
Supply Chain Disruption
A manufacturer can't meet delivery deadlines because a component supplier raised prices 300% due to global shortages.
This likely doesn't qualify for force majeure. Increased costs or difficulty, absent impossibility, typically don't excuse performance. The manufacturer may face breach claims unless the contract specifically covers supply chain issues.