Force Majeure - Clauses and Explanations

Force Majeure

Example Clauses

1. Neither party shall be liable in damages or have the right to terminate this Agreement for any delay or default in performing hereunder if such delay or default is caused by conditions beyond its control including, but not limited to Acts of God, Government restrictions (including the denial or cancellation of any export or other necessary license), wars, insurrections and/or any other cause beyond the reasonable control of the party whose performance is affected.

2. Neither party shall be liable for any failure or delay in performance under this Agreement (other than for delay in the payment of money due and payable hereunder) to the extent said failures or delays are proximately caused (I) by causes beyond that party's reasonable control and occurring without its fault or negligence, including, without limitation, failure of suppliers, subcontractors, and carriers, or party to substantially meet its performance obligations under this Agreement, provided that, as a condition to the claim of nonliability, the party experiencing the difficulty shall give the other prompt written notice, with full details following the occurrence of the cause relied upon. Dates by which performance obligations are scheduled to be met will be extended for a period of time equal to the time lost due to any delay so caused.

Commentary: These examples are typical of force majeure clauses in commercial contracts. As is common practice, these clauses excuse a party from performing its obligations if the failure is caused by subcontractors, suppliers and/or carriers. In agreements for on-line access to remote databases, such clauses may excuse failures due to problems with phone lines or third parties. To make sure that the parties know exactly what is and is not a legitimate excuse for failure to provide access to licensed materials, it would be better to specifically set forth the circumstances that excuse a failure of performance, rather than rely on a general force majeure clause. 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. (See Licensor Performance Obligations.)

3. [Licensor]'s failure to perform any term or condition of this Agreement as a result of conditions beyond its control such as, but not limited to, war, strikes, fires, floods, acts of God, governmental restrictions, power failures, or damage or destruction of any network facilities or servers, shall not be deemed a breach of this Agreement.

Commentary: This clause only excuses the licensor--and not the licensee--from its contractual obligations. This seems one-sided, but if the licensee's only obligation is to pay money as discussed above, the clause may be acceptable. If, however, t he licensee has other non-payment obligations, a clause like this should be replaced with one that gives both parties the same protection.



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