Contracts set clear expectations for companies that are doing business with each other. They often have several terms that outline nearly every facet of the agreement. It’s critical that both parties do their respective parts to ensure the contract is completed successfully.
There are times when things beyond a party’s control may prevent them from upholding their end of the contract. If there is a force majeure clause, they might be saved from having to deal with harsh penalties for breaching the contract.
What is a force majeure clause?
A force majeure clause outlines specific situations in which one party can modify or break the contract without penalty. This often covers things like natural disasters, such as blizzards. It can be as specific or broad as both parties agree to, which enables full customization.
It’s important to note that these clauses only come into effect if the situation is out of the party’s control and completely prevents the contract’s satisfaction as stated. For example, it would go into effect if a blizzard prevented travel necessary for the project, but it wouldn’t go into effect if supplies for the project increased.
Once the force majeure is triggered, a decision has to be made about whether the project should be delayed or if the contract should be canceled. If the contract is delayed, the new terms should be written to ensure both parties understand exactly what’s expected.
All the contract’s terms should be tailored to meet the unique needs of both parties. Working with someone who can evaluate the terms and offer adjustments as necessary may be beneficial in these cases.
