Understanding "Force Majeure" in Business Agreements: How Courts Interpret Unexpected Failures
Force majeure clauses rarely become important when contracts are signed. They become important when somebody stops performing. That difference matters. In many business disagreements, neither side focused on the force majeure clause while negotiating. This clause was copied from a previous contract, taken from a form contract, or adopted without much debate. Then months or even years down the line, after performance fails, both sides suddenly start interpreting the clause as if it is the most negotiated clause in the entire contract. The courts don’t get that same benefit. They are required to interpret the clause as it was actually written. Force Majeure Became a Commercial Issue Before It Became a Legal Issue Most force majeure disputes do not begin with legal notices. The conversations begin with awkward phone calls. It starts with a supplier telling you that your delivery deadlines cannot be met anymore. Then, the contractor asks for more time. The logistics c...
