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  • Writer's pictureErika Andresen

May the Force Majeure be with you

Force Majeure is a clause in almost every contract a business enters into - as an end user, with a vendor, and in its own contract as a provider (at least it should be!). However, most people have never heard of one or seen one.

Force Majeure (FM) is basically a get out of jail free card for the performing party in a contract. It allows them to cancel the contract without penalty in the event a disaster or disruption happens. It used to only mean "Acts of God" - something no human could have caused, like a tornado or hurricane. The events that qualify have expanded greatly due to the fact that what we think of as a disaster or disruption has evolved. Example: ransomware was not a thing in 1960, but FM was.

Now, to be fair, FM has its place - it would be patently wrong to force a business to deliver a product or service when their doors are shut because the offices have 4 feet of water flooding them and the systems offline for a period of time. On the other hand, some businesses use their FM clause as a way to not invest in business continuity.

Tsk, tsk, tsk.

In FM clauses, each item listed refers to an event - a disaster or a disruption to business. What's in a FM clause tips you off heavily as to what type of business continuity posture your vendor or provider has. At base, FM is for unforeseen events that were not in the contractor's reasonable control to prepare for. So any coastal businesses in Florida or North Carolina do not have an option with hurricane preparedness since they are foreseeable and steps are within their control to prepare.

As time has gone on, people got creative. FM still traditionally includes Acts of God but also includes floods and fires because they can be caused by humans. Government action can also be included and that really means an emergency declaration is made that would enable the government to take over your business to assist with the response effort. That very thing happened in El Paso, Texas, this winter with a convention center to deal with the mass migration issue.

You will also commonly find things like strikes or issues with carriers. These are all referring to the supply chain. Beware no.1; they are claiming a 3rd party's FM event even if they aren't having their own! It should be the gold standard that every link in the supply chain practices business continuity, but that's not always the case. Maybe a contractor should be held liable for a sloppy vendor.

You might also notice terrorists and hackers in a FM clause. Hackers are a thing but, Beware no.2: hacking is expected and so is protection against it. Also "terrorist" might now include "cyberterrorist." Definitions expand all the time. Even if it is written, it doesn't mean it is a done deal. One social media platform has in the FM clause that even if the event is *within* their reasonable control, they aren't liable. That 100% is about them having a terrible cybersecurity program. If it doesn't make sense, do not agree to it.

Courts will look at 2 things: was it expected and was it preventable? Be smart about what you're negotiating and don't let businesses get away with writing things in there that go against common law.

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