What are force majeure clauses in commercial contracts?

Force majeure clauses excuse contract performance when extraordinary circumstances beyond parties' control make fulfillment impossible or impractical.

Force majeure clauses are contractual provisions that protect parties from liability when extraordinary circumstances beyond their reasonable control prevent contract performance. The term, derived from French meaning "superior force," has become increasingly important in commercial contracts, especially following global disruptions like the COVID-19 pandemic.

Typical force majeure events include:

• Natural disasters (earthquakes, floods, hurricanes)
• War, terrorism, or civil unrest
• Government actions or regulatory changes
• Pandemics or public health emergencies
• Labor strikes or shortages
• Infrastructure failures

Key components of effective force majeure clauses:

Specific event listing: Rather than relying solely on general language, well-drafted clauses enumerate specific events while including catch-all provisions for unforeseen circumstances.

Causation requirements: The clause should specify that the event must directly prevent or significantly impair performance, not merely make it more expensive or inconvenient.

Notice obligations: Parties must typically provide prompt written notice when invoking force majeure, often within specific timeframes.

Mitigation duties: Affected parties usually must demonstrate efforts to minimize impact and resume performance when possible.

Consequences: The clause should clarify whether performance is suspended, terminated, or modified, and address issues like payment obligations and contract extensions.

Without force majeure provisions, parties may face breach of contract claims even when performance becomes impossible due to circumstances beyond their control. As Axel Desmet from Cresco notes, these clauses require careful drafting to balance protection with enforceability.

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