Planning for the Unexpected With a Force Majeure Clause Part 2
In part one of our article, our Orlando construction lawyers defined force majeure events and we talked about who bears the risk of such events when no contract provision is in place. In this part, we’ll give you some tips on limiting your risk through your contract.
Limiting Your Risk
Parties can include a force majeure clause in their contracts to limit the risks associated with an event that would prevent them from performing as well as subject them to liability. Force majeure provisions allocate risk and provide notice to the parties of the types of events that would cause a project to be suspended or that would excuse performance. To be classified as a force majeure event, the event must be beyond the control of the contracting parties, it cannot be anticipated, foreseeable, or expected, and the event must be unavoidable (irresistibility).
Contract Language Matters
When seeking to limit exposure, contractors must be specific and clear in their contract language when defining the scope and effect of a force majeure clause to protect themselves from unexpected liabilities. The following elements should be addressed in a force majeure clause:
- What events are considered force majeure?
- Who is responsible for suspending performance?
- Who is allowed to invoke the clause?
- Which contractual obligations are covered by the clause?
- How should the parties determine whether the event creates an inability to perform?
- What happens if the force majeure event continues for more than a specified period of time?
Aside from contractual language, recordkeeping is critical for limiting a contractor’s liabilities. We recommend that contractors always properly document the occurrence with detailed information regarding the impact of the event and when notice was sent. A reputable Orlando construction lawyer can help contractors avoid breaching their contracts as well as allocating unforeseeable events that occur during a construction project.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.