What is a force majeure clause in commercial contracts?

A force majeure clause protects parties from liability when extraordinary circumstances beyond their control prevent contract performance.

A force majeure clause is a contractual provision that releases parties from liability or obligation when extraordinary circumstances beyond their reasonable control make contract performance impossible or impracticable. The term "force majeure" is French for "superior force" or "greater force."

These clauses typically cover events such as natural disasters, wars, terrorist attacks, government actions, pandemics, labor strikes, and other unforeseeable circumstances. The COVID-19 pandemic brought renewed attention to force majeure clauses as businesses sought relief from contractual obligations they couldn't fulfill due to lockdowns and restrictions.

For a force majeure clause to be effective, it must be clearly drafted and specifically enumerate the types of events covered. The clause should define what constitutes a qualifying event, establish notice requirements, specify the duration of relief, and outline mitigation obligations. Some clauses provide for contract suspension, while others allow for termination.

Not all unexpected events qualify as force majeure. The event must typically be unforeseeable, unavoidable, and external to the parties. Economic hardship or market changes alone usually don't trigger force majeure relief unless specifically included.

Koenraad de Geest notes that courts interpret these clauses strictly, requiring clear evidence that the event directly prevented performance. Parties invoking force majeure must usually demonstrate they took reasonable steps to mitigate the impact.

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