Legal Definitions - force-majeure clause

A force-majeure clause is a common provision found in contracts that addresses what happens if extraordinary, unforeseen events prevent one or both parties from fulfilling their agreed-upon obligations.

These events are typically beyond the control of the parties involved and make it impossible or commercially impractical to perform the contract as originally intended. The clause outlines how responsibilities, deadlines, and liabilities are shifted, suspended, or terminated in such circumstances, ensuring that a party is not unfairly penalized for a failure to perform due to circumstances they could not anticipate or control.

Here are some examples:

• Imagine a software development company that has contracted to deliver a new application by a specific date. A week before the deadline, a massive, unprecedented cyberattack targets critical internet infrastructure across the region, making it impossible for the development team to access necessary cloud services or even communicate effectively for several days. A force-majeure clause in their contract would likely excuse the company from the missed deadline, allowing for an extension without penalty, as the cyberattack was an unforeseen event beyond their control that directly impacted their ability to perform.

• Consider a farmer who has agreed to supply a certain quantity of organic produce to a grocery chain by a specific date. Unexpectedly, a severe, prolonged drought, declared a natural disaster by the government, devastates their crops, making it impossible to meet the agreed supply volume. The force-majeure clause in their contract would protect the farmer from being sued for breach of contract, as the drought was an act of nature that made performance impossible, and the clause would outline how the contract might be adjusted or terminated without fault.

• A concert promoter books a famous band to perform at an outdoor venue. Days before the concert, a sudden, government-mandated public health emergency is declared, prohibiting all large gatherings for an indefinite period. The force-majeure clause in the contract between the promoter and the band would specify what happens next – perhaps allowing for a rescheduling of the concert without financial penalty to either party, or outlining the terms for cancellation and deposit refunds, recognizing that the government order was an unforeseen event that made the performance impossible.