Understanding the purpose of a force majeure clause

On Behalf of | Jan 28, 2024 | Business Structure

Unforeseen circumstances can occur during many business operations in Massachusetts. Sometimes, unexpected events range into the extreme category. When this happens, a clause called force majeure may come into effect that absolves the parties from fulfilling their contractual obligations.

What is force majeure?

To understand the purpose of a force majeure clause in a contract, you should first understand the meaning of the phrase. It’s a French term meaning greater or superior force, so it overrides lesser circumstances. The provision arose from the Napoleonic code and has become common in business law worldwide.

Several conditions must be present for force majeure to come into effect. These are:

  • The circumstances must be highly unusual in nature
  • The circumstances must materially impact the ability of the parties to fulfill their contract
  • Neither party could have anticipated that the unusual event could have occurred
  • The party impaired must do everything in their power to fulfill the contract terms

Before invoking force majeure, you must reasonably try to work around circumstances to overcome existing difficulties. Additionally, you may only be relieved of some of your obligations. For example, you may be relieved from acting according to a schedule, but you’ll need to complete a task later.

Force majeure stipulations in contract

Most business contracts that include a force majeure clause stipulate provisions under which the clause will come into effect. When drafting your business contracts, you can protect your company by listing specific incidents impacting your ability to perform your obligations fully. Examples of applicable events include wars, civil unrest, natural disasters such as hurricanes and tornadoes, and various human actions such as shootings and disease epidemics. Invoking a force majeure clause can help you save your business under extreme circumstances and avoid litigation.

Legal questions about what events are and are not foreseeable have increased over the last few years. Carefully consider which events you want to place in a force majeure clause so the other party will agree. Remember that one of the main purposes of having a force majeure clause is to ensure you don’t wriggle out of a contract.