Force Majeure (Pro-Customer)

Explaining Force Majeure

Customers generally recognize that service providers typically insist on including a force majeure clause to protect the service provider in case a force majeure event occurs that affects its ability to deliver the services. In this clause, you will be preempting the service provider by including a force majeure clause that:

• Applies to both parties, which also protects the customer because the customer may also have significant non-payment obligations.
• Includes a finite list of specifically enumerated force majeure events, which aims to limit the types of force majeure events that excuse performance (compared to an unrestricted list).

The parties should determine whether the impacted party should also have the right to terminate the agreement if the impacted party’s failure or delay remains uncured for the specified number of days.

 

For more information generally about force majeure clauses and related issues, contact us.

Sample Clause

Force Majeure. No Party shall be liable or responsible to the other Party, or be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any term of this Agreement, when and to the extent such Party’s (the “Impacted Party”) failure or delay is caused by or results from the following force majeure events (”Force Majeure Event(s)”): (a) acts of God; (b) flood, fire, earthquake, or explosion; (c) war, invasion, hostilities (whether war is declared or not), terrorist threats or acts, riot or other civil unrest; (d) government order, law, or action; (e) embargoes or blockades in effect on or after the date of this Agreement; and (f) national or regional emergency; and (g) strikes, labor stoppages or slowdowns or other industrial disturbances; and (h) telecommunication breakdowns, power outages or shortages, lack of warehouse or storage space, inadequate transportation services, or inability or delay in obtaining supplies of adequate or suitable materials; and (i) other similar events beyond the reasonable control of the Impacted Party. Notwithstanding the foregoing, Service Provider’s financial inability to perform, changes in cost or availability of materials, components or services, market conditions, or supplier actions or contract disputes will not excuse performance by Service Provider under this Section.

The Impacted Party shall give notice within ten business days of the Force Majeure Event to the other Party, stating the period of time the occurrence is expected to continue. The Impacted Party shall use diligent efforts to end the failure or delay and ensure the effects of such Force Majeure Event are minimized. The Impacted Party shall resume the performance of its obligations as soon as reasonably practicable after the removal of the cause. In the event that the Impacted Party’s failure or delay remains uncured for a period of 30 consecutive days following written notice given by it under this Section, the other Party may thereafter terminate this Agreement upon 30 days’ written notice, subject at all times to the Termination provisions hereof.