Force Majeure
A force majeure clause excuses a party from performing its obligations when an event beyond its reasonable control makes performance impossible or impractical.
What it does
When a natural disaster, war, epidemic, government action, or infrastructure failure strikes, a party may be unable to perform through no fault of its own. Without a clause, the position depends on the governing law. Many civil law systems have a built-in force majeure concept, while common law systems generally do not, and rely on what the contract says. A force majeure clause makes the rule explicit.
The clause typically has four parts. A definition of what counts, usually a general test (beyond the reasonable control of the affected party, not reasonably foreseeable, not avoidable) plus a list of examples. A suspension of the affected obligations for the duration of the event, without liability. A duty to notify the other party promptly and to take reasonable steps to mitigate. And a long-stop: if the event continues beyond a set period, either party may terminate.
Payment obligations are usually excluded. Being unable to pay is not force majeure.
Example wording
Neither party shall be liable for any failure or delay in performing its obligations (other than payment obligations) to the extent caused by an event beyond its reasonable control, including natural disaster, war, terrorism, epidemic, governmental action, or failure of public utilities or networks, provided that the affected party notifies the other promptly, uses reasonable efforts to mitigate the effect, and resumes performance as soon as practicable. If the event continues for more than ninety (90) days, either party may terminate this Agreement on written notice.
Risks for SMBs
The list does not cover what happened. If the clause lists specific events and has no general catch-all, an event that is not on the list may not qualify. Equally, a list drafted before a pandemic or a cyberattack may be silent on both. Prefer a general test plus examples, not a closed list.
It excuses the supplier but not the customer. A one-sided clause suspends the supplier’s obligation to deliver while the customer keeps paying for nothing. A customer should make sure fees are suspended, or reduced, for the period the service is not provided.
Foreseeable and avoidable events. A supplier that fails because its sole sub-supplier failed, or because it did not maintain backups, will struggle to claim force majeure. The event has to be genuinely outside its control. On the supplier side, do not assume the clause covers ordinary business risks like staff shortages, price increases, or a key supplier’s failure.
Notice deadlines. Many clauses require notice within a fixed number of days of the event, failing which the right is lost. During a crisis, sending formal notice is easy to forget. See notice.
No exit. A clause with no long-stop can leave an SMB customer tied to a supplier that cannot deliver, indefinitely, with no right to switch. Insist on a termination right after a defined period.
Common variants and negotiation points
- Definition. A general test plus a non-exhaustive list of examples is the standard middle ground. Expressly include or exclude epidemics, cyberattacks, and government orders, since these are the ones most often argued about.
- Long-stop period. 30 to 90 days is typical. Shorter for services the customer depends on daily, longer for long-term supply deals.
- Fee suspension. Agree that fees are not payable, or are reduced pro rata, for the period the supplier is excused from performing.
- Effect on service levels. Clarify whether force majeure periods are excluded from SLA measurement, so both sides know how uptime is calculated. See service levels.
Related clauses
- Termination for cause: force majeure is the main exception to it.
- Notice: the formalities for claiming force majeure.
- Service levels: how excused periods affect SLA credits.
- Governing law: whether statutory force majeure rules apply in addition to the clause.
This page is general information about a common contract clause. It is not legal advice and does not account for your jurisdiction, industry, or the specific contract in front of you. Talk to a qualified lawyer before relying on it.
Tracking renewal dates, notice periods, and other contract obligations is what Trackado does.