Definition:
A contractual provision that excuses parties from fulfilling obligations due to unforeseen events beyond their control, such as natural disasters or political instability.
Key Components:
- Defined Events: Specifies what qualifies as force majeure (e.g., earthquakes, war, government actions).
- Notification Requirements: Specifies the timeline and process for claiming force majeure.
- Mitigation Obligations: Requires parties to minimize the impact of force majeure events.
Use Cases/Industries:
- Oil & Gas Projects: Delays due to geopolitical conflicts affecting pipeline routes.
- Hydroelectric Plants: Force majeure invoked for construction stoppages due to severe flooding.
- EPC Contracts: Used to handle supply chain disruptions caused by global pandemics.
Advantages:
- Protects Against Unforeseen Risks: Shields both parties from liability in uncontrollable events.
- Prevents Contract Breach Claims: Excuses non-performance under justified circumstances.
Challenges:
- Difficult to Prove: Requires clear evidence that delays were due to force majeure events.
- Potential for Abuse: Contractors may use force majeure to excuse avoidable delays.
Related Terms:
Excusable Delays, Contractual Relief, Legal Exceptions
Example:
A solar project in Southeast Asia invokes force majeure after a government-imposed trade embargo prevents the import of critical components.
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Synonyms:
Acts of God Clause, Unforeseen Circumstances Provision, Contractual Excuse
