When it comes to negotiating a contract, it is important to consider the possibility of unexpected events that may prevent a party from fulfilling their obligations. A force majeure clause, also known as an “Act of God” clause, is a contractual provision that addresses such events. Essentially, a force majeure clause excuses a party from performance when circumstances beyond their control arise that make performance impossible or impractical.
Here is a sample force majeure clause that can be included in a contract:
“Neither party shall be liable for any failure or delay in performance under this Agreement, where such failure or delay is caused by circumstances beyond their reasonable control, including, but not limited to, acts of God, fire, explosion, governmental actions, war, terrorism, labor strikes or other industrial disturbances, or embargoes. In the event of such delay, the time for performance shall be extended for a period equal to the time lost by reason of the delay.”
It is important to note that the specific events listed in a force majeure clause can vary depending on the type of contract and the industry involved. For example, a force majeure clause in a construction contract may include natural disasters, while a force majeure clause in a software license agreement may include computer viruses or hacking attacks.
Including a force majeure clause in a contract can provide protection for both parties in the event of unforeseen circumstances. Without a force majeure clause, a party may be held liable for breach of contract if they are unable to perform due to circumstances beyond their control. On the other hand, including a force majeure clause can also be used as a bargaining chip during contract negotiations.
In summary, a force majeure clause is an important provision in a contract that can protect both parties in the event of unexpected events. It is important to work with an experienced attorney to craft a force majeure clause that is appropriate for the specific contract and industry involved.