The force majeure clause is a provision found in many commercial agreements that seeks to excuse a party`s obligation to perform in the event of unforeseeable circumstances that are beyond their control. The term “force majeure” is derived from French, meaning “superior force”. This clause is usually invoked in the event of natural disasters, war, government regulations, and other unforeseeable events.
A force majeure clause is often included in contracts to protect the interests of both parties in situations where performance becomes impossible or impracticable due to circumstances beyond their control. This means that when unforeseen events occur, the parties to the agreement are no longer bound by the terms of the contract.
The force majeure clause is not a standard provision in all commercial agreements. Therefore, when negotiating terms, it is crucial to ensure that the force majeure clause is included in the agreement. The clause is necessary because it sets out the events that may result in a party being excused from performing its contractual obligations.
The force majeure clause should be drafted in a way that clearly defines the events that constitute a force majeure event. It should also outline the procedures that must be followed when a party seeks to invoke the force majeure clause. For instance, a party that seeks to rely on the force majeure clause must provide written notice to the other party, outlining the reasons for invoking the clause and the expected duration of the event. This is important because it gives the other party enough time to plan or explore alternative arrangements.
It is also important to note that the force majeure clause does not excuse a party`s payment obligations. This means that, even where a force majeure event occurs, a party is still required to pay any outstanding amounts under the contract.
In conclusion, the force majeure clause is an essential provision in any commercial agreement. It is designed to protect both parties from unforeseen circumstances beyond their control that may render performance impossible. Therefore, it is crucial to ensure that the force majeure clause is carefully drafted to avoid any ambiguity or uncertainty that may arise in the event of a dispute. So, while drafting a new agreement, do not forget to include the force majeure clause to protect yourself and your business from unforeseen events.