What Does That Force Majeure Clause Really Do?

by | Dec 13, 2022 | Educational Series

Hi, I’m Lisa. Cofounder, In the Know Legal here to explain the term force majeure. In early 2020, the legal term “force majeure” trended in Google searches as quarantine and the pandemic forced many businesses to cancel their contracts. What exactly is a force majeure and what does it mean? And why do legal terms use so much Latin? Actually, I don’t know the answer to that last question.

What does force majeure mean?

Simply put, a force majeure is an event that occurs outside the reasonable control of the party and it prevents them from performing their obligation(s) under a contract. When a force majeure event happens, one or both parties can be excused from performing under the contract without being considered in breach of the terms. But to determine if something is truly an excusable force  majeure event three things must exist.

  1. The event must be beyond the parties’ reasonable control: This could be something like extreme weather or a pandemic.
  2. The event must prevent  or hinder the party from performing. Not wanting to drive to a service call in the snow is not a force majeure, but having the roads shut down under a declared state of emergency due to a blizzard is.
  3. The party must have taken reasonable steps to attempt to avoid or mitigate the consequences of non performance.  This might mean not incurring additional expenses or offering a partial refund.

So what happens if you’re excused under a force majeure event?   Well, as lawyers love to say that depends. You only need to look into other terms of agreement. A force majeure could require an additional time to perform, could require the termination of the agreement, or something else entirely and that’s all you need to be In the Know about force majeure.

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