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Force majeure clauses allow a party to leave a contract temporarily or permanently, in whole or in part, for catastrophes that were not foreseeable. These catastrophes must cause severe disruption to fulfill a contractual obligation. If the event meets the term in the force majeure clause, both parties can end the agreement without penalty.
Here is another article that defines force majeure.
A force majeure clause triggers when extraordinary circumstances exist. It’s derived from French Law and translates to “major force.” They come into effect when a party cannot follow through on pacta sunt servanda, meaning “agreements must be kept” in Latin.
Triggering events may include:
You can find out more about force majeure clauses by checking out this page.
Force majeure clauses may not apply to the coronavirus pandemic. You must also reasonably prove that you can’t meet the agreement. Review the provisions of your contract and work with attorneys to determine if the force majeure provision applies to your situation.
For more information about force majeure clauses & COVID-19, check out this article.
The purpose of force majeure clauses is to release a party when they can no longer fulfill the obligations, usually due to a severe, unforeseen event.
Examples of situations that may require force majeure clauses include:
13.1 Force Majeure If and to the extent that a Party’s performance of any of its obligations pursuant to this Agreement is prevented, hindered or delayed directly or indirectly by fire, flood, earthquake, elements of nature or acts of God, acts of war, terrorism, riots, civil disorders, rebellions or revolutions, or any other similar cause beyond the reasonable control of such Party (each a “Force Majeure Event”), and such non-performance, hindrance or delay could not have been prevented by reasonable precautions, then the non-performing, hindered or delayed Party shall be excused for such non-performance, hindrance or delay, as applicable, of those obligations affected (the “Affected Services”) by the Force Majeure Event for as long as the Force Majeure Event continues and, except as otherwise provided in this Section, such Party continues to use its commercially reasonable efforts to recommence performance whenever and to whatever extent possible without delay, including through the use of alternate sources, workaround plans or other means. The Party whose performance is prevented, hindered or delayed by a Force Majeure Event shall promptly notify the other Party of the occurrence of the Force Majeure Event and describe in reasonable detail the nature of the Force Majeure Event. During the Force Majeure Event, WSI will continue to pay IBM’s charges for the Services.
Reference:
Security Exchange Commission - Edgar Database, EX-10.1 2 dex101.htm SERVICES AGREEMENT, Viewed March 31, 2021, < https://www.sec.gov/Archives/edgar/data/719955/000119312504210939/dex101.htm >.
Force Majeure. Neither party shall be held responsible for any delay or failure to perform any part of this Agreement to the extent such delay or failure results from any cause beyond its reasonable control and without the fault or negligence of the party claiming excusable delay or failure to perform, such as acts of God, acts of war or terrorism, extraordinary acts of the United States of America or any state, territory or political subdivision thereof, fires, storms, floods, epidemics, riots, work stoppages, strikes (work stoppages and/or strikes of any of the parties to this Agreement are specifically excluded from the language of this section), embargoes, government restrictions, exchange or market rulings, extreme market volumes or volatility, suspension of trading (whether declared or undeclared), adverse weather or events of nature. Upon an occurrence of an event of force majeure, Envestnet cannot insure uninterrupted or error free service or access to the Platform Services or the Envestnet Materials and there may be periods where access is delayed, limited or not available. Envestnet shall use commercially reasonable efforts to provide Platform Services to FundQuest and FQ Clients in accordance with its business continuity policy. A copy of the current business continuity policy shall be provided to FundQuest prior to the signing of this Agreement.
Reference:
Security Exchange Commission - Edgar Database, EX-10.8 4 dex108.htm PLATFORM SERVICES AGREEMENT, Viewed March 31, 2021, < https://www.sec.gov/Archives/edgar/data/1337619/000119312510151843/dex108.htm >.
21.1 Force Majeure Events. Except to the extent provided in this Agreement, no Party shall be liable for any default or delay in the performance of its obligations under this Agreement (i) if and to the extent such default or delay is caused, directly or indirectly, by acts of terrorism, fire, flood, earthquake, elements of nature or acts of God, riots, civil disorders, or any other such similar cause beyond the reasonable control of such Party, and (ii) provided the non-performing Party is without fault in causing such default or delay, and such default or delay could not have been prevented by reasonable precautions and could not reasonably be circumvented by the non-performing Party through the use of alternate sources, workaround plans or other means (including with respect to Provider, by Provider meeting its obligations for performing disaster recovery services as described in this Agreement). Any such event or occurrence as described in this Section 21.1 shall be deemed a “Force Majeure Event.”
Reference:
Security Exchange Commission - Edgar Database, EX-10.2 76 dex102.htm MASTER SERVICE AGREEMENT, Viewed March 31, 2021, < https://www.sec.gov/Archives/edgar/data/820609/000119312510160027/dex102.htm >.
Force Majeure. Neither party shall be responsible for any failure to fulfill its obligations hereunder due to causes beyond its reasonable control, including without limitation acts or omissions of government or military authority, acts of God, shortages of materials, transportation delays, fires, floods, diseases, labor disturbances, riots, or wars provided that it gives prompt notice to the other of its invocation of this provision and make diligent efforts to resume its performance despite such force majeure. For purpose of clarification, Customer acknowledges, in the event that recommendations are issued by: (i) NAVITAIRE’s parent company “Global Watch Program”
Reference:
Security Exchange Commission - Edgar Database, EX-10.3 7 dex103.htm HOSTED SERVICES AGREEMENT, Viewed March 31, 2021, < https://www.sec.gov/Archives/edgar/data/1498710/000119312511049608/dex103.htm >.
Common contracts with force majeure clauses include:
Force majeure clauses and laws are different for every state. Here are a few force majeure clause FAQs to help you understand them better:
You should add a force majeure clause to your client contract. Any industry or business can face significant disruptions at any time without warning. Protect yourself with a force majeure clause.
COVID-19 is a force majeure event in some instances and states. Speak with contract lawyers to help you determine if coronavirus applies to your situation.
