Force Majeure

Force Majeure literally means "greater force". These clauses excuse a party from liability if some unforseen event beyond the control of that party prevents it from performing its obligations under the contract. Typically, force majeure clauses cover natural disasters or other "Acts of God", war, or the failure of third parties--such as suppliers and subcontractors--to perform their obligations to the contracting party.

 

It is important to remember that force majeure clauses are intended to excuse a party only if the failure to perform could not be avoided by the exercise of due care by that party.

When negotiating force majeure clauses, make sure that the clause applies equally to all parties to the agreement--not just the licensor.

 

Also, it is helpful if the clause sets forth some specific examples of acts that will excuse performance under the clause, such as wars, natural disasters, and other major events that are clearly outside a party's control. Inclusion of examples will help to make clear the parties' intent that such clauses are not intended to apply to excuse failures to perform for reasons within the control of the parties.

 

 

Force majeure clauses are usually applicable to performance failures caused by:

• natural disasters (earthquakes, hurricanes, floods)
• wars, riots or other major upheaval
• performance failures of parties outside the control of the contracting party (e.g., disruptions in telephone service attributable to the telephone company or labor actions by employees of a common carrier)

Disruptions in service caused by one or more of the following should not be excused by a force majeure clause:

• server failures
• software glitches
• disputes with copyright owners
• licensor labor disputes

Many force majeure clauses apply equally to both sides, excusing either party from its obligations in the event of a triggering event; however, few clauses excuse the failure to pay money. For all practical purposes, the clauses will only excuse failures to perform by the licensor. Accordingly, licensees should seek express guarantees of some level of minimum access from licensors