This clause grants one or both parties the right to terminate a contract if a force majeure event prevents performance for a specified period (commonly 30, 60, or 90 days). Unlike a simple suspension of duties, termination allows the affected party to exit the contract entirely rather than waiting for conditions to improve. For example, if a supplier cannot deliver goods for 60 consecutive days due to a natural disaster, the buyer may have the right to terminate the supply agreement and source from elsewhere. This clause matters because it provides an exit valve when force majeure events create prolonged disruption—without it, parties could be locked into contracts that have become economically pointless or operationally impossible to perform.
The clause protects both parties from indefinite limbo but creates risk: a party might invoke termination rights opportunistically if market conditions shift during the force majeure period (e.g., a buyer terminates when prices drop, claiming the supplier's force majeure event justifies exit). The clause's scope—whether it applies to all parties equally, whether notice is required, and whether termination is automatic or discretionary—significantly affects its practical impact.
Negotiate clear trigger conditions: specify the exact duration of non-performance required (e.g., "30 consecutive days of material non-performance"), whether partial performance counts, and how to measure the duration. Require written notice and a cure period (e.g., "party must provide 10 days' notice and opportunity to resume performance before termination is effective"). Consider asymmetrical rights if appropriate—for example, allowing a supplier to terminate if unable to source raw materials, but allowing a buyer to terminate only if the supplier cannot resume within a longer window. Include language requiring good faith determination that the force majeure event actually prevents performance, not merely makes it more expensive or inconvenient. Define what happens to prepayments, deposits, or partially completed work upon termination.
Frequently Asked Questions
What does this clause mean in simple terms?
This clause grants one or both parties the right to terminate a contract if a force majeure event prevents performance for a specified period (commonly 30, 60, or 90 days).
Why should I care about this clause?
Unlike a simple suspension of duties, termination allows the affected party to exit the contract entirely rather than waiting for conditions to improve.
What are my options?
For example, if a supplier cannot deliver goods for 60 consecutive days due to a natural disaster, the buyer may have the right to terminate the supply agreement and source from elsewhere.
How does this affect small businesses?
This clause matters because it provides an exit valve when force majeure events create prolonged disruption—without it, parties could be locked into contracts that have become economically pointless or operationally impossible to perform.