Real Estate Force Majeure Clause In Clark
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Either Party shall be excused from performance and shall not be in default in respect of any obligation hereunder to the extent that the failure to perform such obligation is due to a Natural Force Majeure Event.
Businesses are wise to consider force majeure clauses in all of their key contracts. It is an opportunity to plan for the unpredictable.
A Standard Clause for use in commercial real estate agreements that permits the parties to allocate the risk of certain events beyond the control of the parties (known as force majeure events), such as acts of God, natural disasters, epidemics, pandemics, government acts, and labor strikes.
The definition of "force majeure" generally includes "risks beyond the reasonable control of a party, incurred not as a product or result of the negligence of the afflicted party, which have a materially adverse effect on the ability of such party to perform its obligations".
The major difference in such cases is that, without a force majeure clause, the party that wants to be released from contract obligations has the burden of proof, which means that this party must prove their argument is correct. If the other contracting parties do not agree, this could lead to litigation.
For events to constitute the use of force majeure, they must be unforeseeable, external to contract parties, and unavoidable. Force majeure means “greater force” and is related to an act of God, an event for which no party can be held accountable.
There are generally three essential elements to force majeure: • tt can occur with or without human intervention • it cannot have reasonably been foreseen by the parties • It was completely beyond the parties' control and they could not have prevented its consequences.
Neither Party shall be liable for failure of or delay in performing obligations set forth in this Agreement, and neither shall be deemed in breach of its obligations, if such failure or delay is due to natural disasters or any causes beyond the 5 reasonable control of either Party.
“Force Majeure” means: hurricanes, floods, extreme weather, earthquakes, fire, or other acts of God, unusual transportation delays, or wars, insurrections, or acts of terrorism, which, by exercise of reasonable diligent effort, the non-performing party is unable in whole or in part to prevent or overcome.
Because the concept is foreign, lawyers who review or draft contracts governed by U.S. law should start with the assumptions that 1) principles of force majeure will not be implied in a contract that does not expressly provide for them, and 2) U.S. courts will interpret and apply force majeure provisions narrowly.
