Tekena Supplies, a small business, agreed to supply 10,000 umbrellas to Chibuzo & Sons, a retail store, by March 15th. The contract didn’t include a Force Majeure clause.
On March 25th, a severe storm hit the port city where Tekena Supplies’ manufacturer was located, damaging the factory and disrupting production. The manufacturer couldn’t deliver the umbrellas on time.
Tekena Supplies informed Chibuzo & Sons about the delay, but they refused to accept the excuse, citing the contract’s strict delivery deadline.
Chibuzo & Sons sued Tekena Supplies for breach of contract, seeking damages for lost sales.
Force Majeure, French for “greater force,” refers to events that:
1. Are beyond the control of either party.
2. Could not have been reasonably anticipated or prevented.
3. Make contract performance impossible or impracticable.
Force Majeure events:
1. Natural disasters (e.g., earthquakes, hurricanes, floods).
2. Wars, terrorism, or civil unrest.
3. Government actions or regulations.
4. Epidemics or pandemics.
5. Strikes or labor disputes.
6. Unforeseen changes in laws or regulations.
7. Cyberattacks or data breaches.
Purpose of Force Majeure clause:
1. Allocates risk between parties.
2. Excuses performance during unforeseen events.
3. Prevents disputes and litigation.
4. Provides clarity on contract termination or suspension.
Force Majeure is a clause in contract agreements that releases parties from their obligations due to unforeseen, extraordinary events beyond their control.
Key considerations in creating this clause:
1. Clearly define Force Majeure events.
2. Establish notice requirements.
3. Specify consequences of Force Majeure (e.g., contract termination).
4. Ensure the clause is mutually beneficial.
5. Review and update the clause regularly.
6. Establish procedures for notifying the other party in case of Force Majeure.
By including a well-drafted Force Majeure clause, parties can protect themselves from unforeseen events and ensure fairness in contract performance.
