Force Majeure Construction Contract Clause
The Force Majeure Construction Contract Clause: What You Need to Know
A force majeure clause is a common provision in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs, making it impossible or impractical for one or both parties to fulfill their obligations under the contract.
In the construction industry, force majeure clauses are particularly important, as unforeseen events such as natural disasters, labor strikes, and supply chain disruptions can significantly impact project timelines and budgets. That`s why most construction contracts include a force majeure clause to provide both the contractor and the client with protection in case of such events.
What Does a Force Majeure Clause Cover?
A force majeure clause typically covers events or circumstances that are beyond the control of the contracting parties and that make it impossible or impractical for them to fulfill their obligations under the contract. These events can include:
– Natural disasters such as floods, hurricanes, earthquakes, and wildfires
– Wars, acts of terrorism, and other political disturbances
– Labor strikes, lockouts, and other labor disputes
– Supply chain disruptions such as shortages of materials or equipment
– Acts of government or regulatory bodies such as expropriation, confiscation, and nationalization
When a force majeure event occurs, the contractor is usually required to provide written notice to the client as soon as practicable, describing the event and its impact on the project. The client then has the right to suspend or terminate the contract or to agree to a revised schedule and budget.
However, it`s important to note that not all force majeure events are created equal. Some events may be explicitly listed in the contract as force majeure events, while others may be subject to interpretation. For example, a labor strike may be considered a force majeure event if it affects the entire industry, but not if it only affects the contractor`s own workforce.
In addition, some force majeure events may be subject to legal disputes. For example, in the case of a pandemic like COVID-19, the question of whether it qualifies as a force majeure event may depend on the specific language of the contract and the applicable laws and regulations.
How to Draft a Force Majeure Clause
If you`re a contractor or a client in the construction industry, it`s crucial to include a well-drafted force majeure clause in your contracts to protect yourself in case of unforeseen events. Here are some tips for drafting an effective force majeure clause:
– Be specific: List the events or circumstances that will qualify as force majeure events, and include any exclusions or limitations. For example, if you want to exclude weather-related delays, you can specify that only “unusual” weather events will be considered force majeure events.
– Be clear: Use plain language and avoid legal jargon or ambiguity. Make sure both parties understand exactly what events or circumstances will trigger the force majeure clause and what the consequences will be.
– Be reasonable: Don`t try to use the force majeure clause as a way to escape your obligations under the contract. Make sure the clause is balanced and fair to both parties.
– Be comprehensive: Consider including provisions for how notices will be given, how the contract will be suspended or terminated, and how disputes will be resolved.
In conclusion, a force majeure clause is an essential provision in construction contracts that can provide both contractors and clients with protection in case of unforeseen events. By drafting a clear and comprehensive clause, you can help ensure that your project goes smoothly even in the face of unexpected challenges.
