The Clause Files: Force Majeure

A series breaking down common contract clauses and explaining why they’re included. After all, your contract clarity is out there.

Force Majeure. Neither party shall be held responsible for delays or non-performance caused by activities or factors beyond its reasonable control, including without limitation, war, weather, strikes, lockouts, fires, acts of God, terrorism, or any other activities or factors beyond its control, whether similar or dissimilar to any of the foregoing.

The force majeure clause is the part of a contract that refers to a precipitating event outside a party's reasonable control that prevents party's adequate performance of its contractual obligations. Pursuant to Tenn. Code Ann. § 47-2-615, a party’s obligations may be excused if performance becomes impractical solely as a result of the occurrence of an event which the nonoccurrence was a basic assumption upon entering the agreement. The event would occur in between the time an agreement has been fully executed but before performance. Just like with indemnification, force majeure is about risk allocation. The difference between the two being an indemnification clause deals with compensating for losses or liabilities, while a force majeure clause addresses excusing performance due to uncontrollable events. The COVID-19 pandemic was widely invoked as a force majeure event in contracts, as it made performance impossible or impractical for many parties.

A custom force majeure clause can provide greater protection, clarity, and relevance to specific circumstances, reducing the likelihood of disputes and ensuring fair treatment during unforeseen events.

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