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What are force majeure clauses in construction contracts?

With the devastation and havoc from Hurricane Irma still lingering, construction projects faced numerous setbacks during tropical storm season. One way the construction industry has learned to handle unexpected and unplanned events is to incorporate a force majeure clause into contracts.

The term is French and loosely translates to “superior force.” Contracts containing a force majeure clause outline unexpected occurrences that might excuse nonperformance.

Terms and scope

Used as a risk allocation tool, force majeure clauses have a significant amount of flexibility. The contract can list a range of possible hardships making performance merely inconvenient to utterly impossible. A contractor might include labor and material shortages along with natural disasters as terms for use. While shortages could make completing the project on time more uneconomical, recovery for lost time would be significantly less than if faced with a natural disaster, but either could be applicable if listed as terms in the clause.

The length of the clause should also be considered. In most cases they are temporary, allowing all parties to maintain contractual performance agreements once an event passes. Depending on damage caused by an event, when it is impossible or impractical to resume work, a force majeure clause could outline differing outcomes to account for event severity. In a very severe case, work could be permanently halted, yet both parties would maintain the contractual relationship.

Keep these points in mind when drafting a force majeure clause:

  • What will constitute a force majeure event?
  • What are triggering events and what needs to be done when they occur?
  • Who will communicate notice of an event and who has the authority to suspend work?
  • What happens when a force majeure event extends a specified period of time?
  • When will contractual obligations be halted?

If a force majeure clause does not exist, parties face contractual disputes. The scope of the document is limited only by the negotiations between all parties. When drafting a clause, tailor it to the specific project at hand, a catch-all document will not suffice.

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