Force Majeure – Contract Tip of the Week

Q: What is “force majeure” and how does a force majeure provision impact my contract?

A:  A force majeure is an occurrence beyond your control that may impact your ability to perform your contractual obligations. Typical force majeure events might include war, riots, crime, labor strikes, and extreme weather conditions. A force majeure clause in your contract acknowledges that those types of events may occur during its term and typically provides for some allowances in the schedule under those conditions. Alternatively, you may see a time is of the essence provision in your contract. If a time is of the essence provision is enforced, this may create an uninsurable breach of contract claim. Consider amending the schedule to include allowances for circumstances which may arise that are beyond your reasonable control.

The Risk Specialty Group and RLI Design Professionals are pleased to feature our Contract Tip of the Week series. Each week, we’ll review a question submitted by a design firm relating to the subject of contracts. Keep in mind, though, that these discussions are general in nature and in making specific business decisions, it’s important to review your options with a knowledgeable attorney.