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The importance of a well-crafted force majeure clause

On Behalf of | Jan 23, 2024 | Construction Disputes

Texas weather can be summed up in one word: unpredictable. It can wreak havoc on even the most carefully planned construction projects at any time of year. And, for better and for worse, the weather and other “acts of God” like earthquakes, sink holes, floods and fires aren’t the only things that those in the building industry can’t control. Supply chain breakdowns, unexpected shortages of materials, labor strikes and even terrorism and war can slow or halt a project. Something happening halfway around the world can affect a building project here in the U.S.

These realities are just a few of the reasons why it’s crucial to have a well-written force majeure (“superior force”) clause in building contracts. This clause can minimize the financial damage for contractors and others if something that couldn’t have reasonably been predicted or planned for disrupts a project.

What a force majeure clause needs to do

When crafting contracts, you don’t just want a “standard” force majeure clause. That can be essentially useless. It should protect your interests, but it has to be fair to the other parties or they won’t agree to it. It needs to be thorough and not overly broad. A poorly crafted force majeure clause may not hold up in court if it’s challenged.

It doesn’t replace the need for careful planning and contingencies

It’s also important to keep in mind that a lack of foreseeability of something is key to being able to invoke and enforce a force majeure clause. A contractor may know there’s the possibility of a strike within the next few months and that hurricane season is coming. Those can be considered “foreseeable.” They’d likely have no way of predicting the sinking of a cargo ship with needed materials in another part of the world, however.

Finally, it’s smart to have a “Plan B” and maybe a “Plan C” ready in case something unexpected happens. It benefits everyone to get a project completed as close to schedule and budget as possible.

The key thing to remember about force majeure and all other parts of a contract is that they need to be written uniquely to reflect each contract’s needs. One force majeure clause may not be right for all of your contracts. Proper drafting requires experienced legal guidance, which is often worth the time and money it can save you in court costs and other financial and reputational losses in the event that something goes wrong.