[Updated January 3, 2012, to make the definition of “Force Majeure Event” read better; further updated January 9, 2012, to revise, experimentally, my proposed definition of “Force Majeure Event” to address the issue raised in the first paragraph of this comment by reader Vance Koven.]
I find the standard definition of force majeure a little silly. You know what such definitions look like:
“Force Majeure Event” means any cause(s) which render(s) a Party wholly or partly unable to perform its obligations under this Agreement (other than obligations to make payments when due), and which are neither reasonably within the control of such Party nor the result of the fault or negligence of such Party, and which occur despite all reasonable attempts to avoid, mitigate or remedy, and shall include acts of God, war, riots, civil insurrections, cyclones, hurricanes, floods, fires, explosions, earthquakes, lightning, storms, chemical contamination, epidemics or plagues, acts or campaigns of terrorism or sabotage, blockades, embargoes, accidents or interruptions to transportation, trade restrictions, acts of any Governmental Authority after the date of this Agreement, strikes and other labor difficulties, and other events or circumstances beyond the reasonable control of such Party.
They result in a kind of arms race, with drafters throwing in ever more scenarios. Cumulatively, they evoke someone’s fevered vision of the apocalypse. I half expect to see, one of these days, “the Rapture” added as an element.
Because this sort of definition is an enlarging definition, using including (see MSCD 5.19), I prefer not to add endless examples. I leave the broader provision unencumbered and instead focus on what, if anything, I want excluded from the definition. I think that affords greater certainty and addresses better the concerns of whichever party won’t be invoking the provision.
Here’s an example of a force majeure provision that I used in a recent draft. I’m not suggesting that it’s perfect, but it will give you an idea of my approach:
5.10 Force Majeure. (a) If a Force Majeure Event occurs, the party that is prevented by that Force Majeure Event from performing any one or more obligations under this agreement (the “Nonperforming Party”) will be excused from performing those obligations, on condition that it complies with its obligations under section 5.10(c).
(b) For purposes of this agreement, “Force Majeure Event” means, with respect to a party, any event or circumstance, regardless of whether it was foreseeable, that was not caused by that party and that prevents a party from complying with any of its obligations under this agreement [(other than an obligation to pay money)], on condition that that party that uses reasonable efforts to do so, except that a Force Majeure Event will not include [any a strike or other labor unrest that affects only one party, an increase in prices, or a change of law].
(c) Upon occurrence of a Force Majeure Event, the Nonperforming Party shall promptly notify the other party of occurrence of that Force Majeure Event, its effect on performance, and how long that party expects it to last. Thereafter the Nonperforming Party shall update that information as reasonably necessary. During a Force Majeure Event, the Nonperforming Party shall use reasonable efforts to limit damages to the Performing Party and to resume its performance under this agreement.
Although the defined term is Force Majeure Event, I define it as “any event or circumstance.” That serves to acknowledge that you can have some situations that consist of an event and its aftermath (meteor strike!) and others that consist of an ongoing circumstance (bubonic plague!). This definition covers both, allowing you to avoid the clunky construct continuation of a Force Majeure Event.
A broader question is whether a force majeure provision is appropriate in a given transaction. They started life in contracts relating to big construction projects and the like, particularly in international contexts, but migrated to contracts for transactions that are less prone to such disruptions. Do you think that force majeure provisions are overused?
[Update: Reader Fitz suggests giving the non-affected party the right to terminate if the force majeure event continues for more than a reasonable time. If the contract term is long enough, that would be appropriate.]