This clause excludes liability for losses caused by failure to perform due to force-majeure events (unforeseeable, uncontrollable circumstances such as natural disasters, pandemics, wars, or government actions). Specifically, it prevents a party from claiming damages when the other party cannot fulfill its obligations because of these extraordinary events. For example, if a supplier cannot deliver goods because of a hurricane, this clause would shield them from liability for the buyer's lost opportunity to sell those goods to customers. The clause is designed to allocate the risk of truly unforeseeable events fairly, recognizing that neither party should bear the cost of events beyond human control. However, the clause matters because the definition of "force majeure" and what counts as "loss of opportunity" can be ambiguous and lead to disputes about whether a particular event qualifies.
Ensure the force-majeure clause includes a detailed, specific list of qualifying events (rather than vague language like "acts of God") and explicitly defines what "loss of opportunity" means in your industry context. Include notice requirements—the non-performing party should be required to notify the other party promptly and take reasonable steps to mitigate the impact. Consider adding a time limit: if performance is impossible for more than a specified period (e.g., 90 days), either party should have the right to terminate without penalty. If you are the party dependent on performance, negotiate for a "best efforts" obligation even during force-majeure events, and clarify whether the exclusion applies only to non-performance or also to indirect losses. Have legal counsel review the clause against your jurisdiction's force-majeure law, as courts sometimes imply obligations that override contractual language.
Frequently Asked Questions
What does this clause mean in simple terms?
This clause excludes liability for losses caused by failure to perform due to force-majeure events (unforeseeable, uncontrollable circumstances such as natural disasters, pandemics, wars, or government actions).
Why should I care about this clause?
Specifically, it prevents a party from claiming damages when the other party cannot fulfill its obligations because of these extraordinary events.
What are my options?
For example, if a supplier cannot deliver goods because of a hurricane, this clause would shield them from liability for the buyer's lost opportunity to sell those goods to customers.
How does this affect small businesses?
The clause is designed to allocate the risk of truly unforeseeable events fairly, recognizing that neither party should bear the cost of events beyond human control.