In corporate America I negotiated and drafted multi-million dollar international contracts for about seven years and it was not only exciting, but fulfilling because at the time of contract execution the parties had reached an agreement that was thoroughly discussed, hashed out and vetted for maximum benefit. I can confidently say that the contracts were fair and resulted in a win-win for the stakeholders. That is my philosophy of what a good contract should be – thorough, fair and a win-win.
One of the clauses that makes a contract optimal is called a Force Majeure clause. This French phrase simply means “a greater/superior force” and explicitly addresses how a contract will be handled in the event that there is a reasonably unforeseen event beyond a party’s control that prevents a party from fulfilling its obligation under the terms of the contract. Such events include, but are not limited to natural disasters, labor strikes, acts of God, terrorism, government action/laws, etc.
These occurrences, while certainly realistic possibilities, are by their very nature, not anticipated at the time of contracting. Therefore, the parties come to special terms to discuss methods and timing of notification about a force majeure event, length of the delay of performance, up to total cancellation of the contract.
It is vitally important in today’s rapidly changing global environment to have fairly negotiated force majeure clauses that are easy to understand and implement in the unfortunate case of a major event outside of your control. If you have not yet executed a contract, I strongly urge you to add a force majeure clause and, if you already have a contract without such a term, consider speaking with the other party about a contract modification to include a mutually beneficial force majeure clause before an event arises.
Finally, if you have a contract that contains a force majeure clause and you want to understand what your obligations and that of the other party are under the the terms of the contract, consult with an experienced attorney who can help you to understand and navigate through the terms.
Happy contracting and feel free to contact us with any inquiries at cynthia@cmgloballaw.com.