Force majeure in a contract: how to protect your interests?
09.12.2024
Force majeure is an unexpected event that is beyond the control of the parties and makes it impossible to fulfill contractual obligations. Correctly including this condition in the contract helps to avoid unnecessary disputes and financial losses.
What is force majeure?
Force majeure includes events that cannot be foreseen or prevented. Examples:
- Natural disasters (earthquakes, floods, hurricanes)
- Social upheavals (wars, strikes, revolutions)
- Government bans (sanctions, quarantines, changes in legislation)
Important: Normal difficulties (such as a lack of resources or rising prices) are most often not considered force majeure, unless otherwise specified in the contract.
Why is it important to include force majeure in the contract?
- Release from liability. If a party is unable to fulfill its obligations due to force majeure, this is not considered a breach
- Maintaining trust. The clause shows that the parties are aware of the risks and are ready to cooperate honestly
- Procedure. The contract specifies how the parties must notify each other and what to do if force majeure occurs
How to correctly specify force majeure in a contract?
1. List of circumstances
Specify which events are considered force majeure. Use wording like “including, but not limited to” to account for unforeseen situations. For example:
“Force majeure circumstances include: natural disasters, military actions, acts of terrorism, pandemics, actions of government agencies.”
2. Notification procedure
Specify how and within what time frame the parties must notify each other of force majeure. For example:
“A party is obliged to notify the other party of the occurrence of force majeure circumstances within 5 working days from the moment of their occurrence.”
3. Consequences of force majeure
Specify how force majeure affects the obligations of the parties:
- Are the obligations suspended?
- Is it possible to terminate the contract if the force majeure continues for a long time?
4. Confirmation of force majeure
Determine who must confirm the occurrence of force majeure. Most often, this is done with the help of a certificate from the Chamber of Commerce and Industry.
Practical recommendations
- Assess the risks. If your business depends on supplies, transport or international contracts, pay special attention to the wording of force majeure
- Don’t forget about the deadlines. Determine how long the force majeure can last before the contract is terminated
- Review current contracts. Make sure that they include current risks, such as pandemics or sanctions
What to do if force majeure occurs?
- Notify the other party within the specified time
- Prepare documents confirming the fact of force majeure (certificates, government decrees)
- Agree on actions: suspension of obligations, extension of terms or termination of the contract
Force majeure is a tool for protecting the interests of the parties in unforeseen circumstances. By spelling it out correctly, you can minimize risks and maintain good business relations even in times of crisis.
Contact KORGAN Law Firm for detailed information on the importance of including force majeure in a contract, as well as competent drafting of contracts specifically for your type of activity!
Call our specialists at +7 700 50 00 553 or click on the “order a call” button below.
Author of the article: Akhmetova N.