Foreclosure Mind

What You Should Know About Your Contract’s Force Majeure Clause During the Pandemic

In the legal and business worlds, the current Covid-19 global pandemic brings renewed attention to the Force Majeure Clause (FM). These are contract clauses that are triggered when unforeseen extreme events prevent a party from fulfilling their contractual obligations. In all kinds of business matters, FM clauses are already being invoked. This is in response to the far-reaching consequences of Covid-19. There is no reason to doubt that future crises will occur to trigger FM clauses in many contracts. Attorneys and their clients should learn lessons and prepare for such events.

This article will address what FM clauses mean and how they are generally applied under contract law. We’ll also discuss how to deal with FM clauses in existing contracts and considerations for negotiating their language and writing them into future contracts.

What is Force Majeure?

The FM clause of a contract refers to unforeseeable potential events or occurrences. These are outside of anyone’s control that may excuse a party’s obligations to perform their duties under the contract. This French term means “major force.” Most commercial contracts include a boilerplate FM clause to which the parties typically give little consideration until something very big happens. That’s not the best time to begin thinking about your FM clause.

How an FM clause applies to our current pandemic or any other extreme occurrence depends on the specific language and limitations of the clause at issue. There’s no such thing as a “universal” FM clause. As such, attorneys drafting contracts can carefully craft this clause’s language. This is to maximize the client’s protection by directly addressing the most likely and impactful situations that may prevent their performance.

Expect the Unexpected

Most FM clauses specifically refer to events called “acts of God.” Additionally, this includes natural disasters, in addition to wars, terrorist acts, revolutions, labor strikes, and epidemics. Also, other major occurrences that prevent a party from performing on the contract. One reason why the specific language and limitations of a given FM clause are so important is that courts tend to interpret these clauses narrowly. This means if you fail to refer to a certain type of event in your FM clause, don’t expect a judge to bail you out by ruling that the parties intended for the situation at hand to be included.

If you want a certain type of protection in any given situation, put it into the contract as clearly as possible. If a pandemic like Covid-19 isn’t listed in the contract as an FM event, it’s more likely for a court to deny a non-performing party’s request for relief when that happens.

Of course, not every situation that can be argued to constitute a FM can be anticipated and written-into a contract. That is why, after listing examples of events the parties agree to fall under FM, there should be a catch-all phrase to address the unexpected. An example may read like this: “…or any other events or circumstances not within the reasonable control of the party affected…”

Another point to consider in interpreting an existing FM clause or drafting a new one is, does performance under the contract need to be literally “impossible” to excuse it during a FM event? As a legal concept, the impossibility of performance is a high standard to meet.

Force Majeure Clause During the Pandemic

For example, a common type of contract currently affected by Covid-19 is an event agreement. There are contracts between entities and event organizers. These include hotels, convention centers, arenas, etc. The NCAA just made the unprecedented decision to cancel its March Madness basketball tournament. Before escalating to this most cautious option, the NCAA was planning to play the games in near-empty arenas. There would be only the players’ families and limited school personnel in attendance.

It may be argued that the NCAA could have held the tournament under the previous conditions. And thus fulfilled their contractual obligation with the TV networks broadcasting the event. If their contract uses “impossibility” language to excuse performance, the networks would, at first glance, appear to have a strong case. Especially in the absence of a governmental prohibition preventing them from playing. For public relations reasons and other considerations, it seems unlikely that many contract parties, such as CBS, would sue entities like the NCAA for responsibly erring on the side of caution to help curb the pandemic.

Contract Language

As an alternative, less drastic contract language may be used to excuse performance under circumstances falling short of literal “impossibility.” In many events contracts, such as those guaranteeing the booking of a certain number of hotel rooms, a FM clause may be triggered under circumstances. This could be preventing less than a certain percentage of rooms from being used, while the event itself may still be held.

Sometimes, a party to a deal may not want to invalidate the entire contract under certain FM circumstances. It may be possible to partially perform under the contract to the benefit of both sides. Such as with attendance at an event at a level lower than originally promised. A lawyer drafting such a contract should ask their client if they want some wiggle room. This is to allow a lesser version of the agreement to survive the FM event.


Pay close attention to FM clauses in contracts you’re considering signing or are in the process of negotiating. Use your imagination to consider the wide array of extreme events that may occur. And how such occurrences may prevent you from performing your contractual obligations. In our unpredictable world, previously unforeseeable events, such as September 11 occur. It suddenly falls within the realm of future possibility after they happen. We should prepare for them.

For contracts under which you’re already obligated, review its FM clause. Or if there is none, approach the other party to discuss adding one. Perform a SWOT (Strength, Weakness, Opportunity, Threat) analysis. There should be an emphasis on the “T”. Threats show how you or your business may react to improbable but highly impactful events. There are good reasons why many professionals such as surgeons and pilots rely so much on checklists. In times of crisis, it helps to follow well-planned protocols created in times of calm.

Consider opportunities to mitigate the harm to your business. These include major forces outside your control that prevent you from performing on a contract. If a given extreme event should excuse your performance entirely, make sure that protective language, as specific as possible, is included in a thoughtful Force Majeure clause. If there is room to reduce or delay your obligations under certain circumstances while preserving the deal in some way, work with your attorney. They will write such language into your contract.

At CPC Law, we represent businesses, investors, and individuals in a wide variety of commercial matters. In times of crisis and calm, you can call our firm. Get excellent and experienced legal advice and services for your transactional and litigation needs.