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The importance of including a force majeure clause

On Behalf of | Jun 20, 2019 | Contract Disputes |

When homeowners or property owners commission a construction project, they often have high expectations. If there are any delays on the project, it is easy for both parties to grow stressed and perhaps even pursue legal action.

However, some delays are out of either parties’ control. That is why it is beneficial to include a force majeure clause in the contract. Even though it is impossible to predict what unforeseeable events could delay or inhibit a project, this clause protects construction companies from facing serious accusations of breaching their contract. 

Force majeure clauses reduce risk and cover bases

If contractors do not include a force majeure clause in their contract, the liability, risk and loss caused by unforeseen events could fall on them. This clause is a way to avoid that liability while also protecting the project. 

Including this clause will ensure that neither the contractor nor the property owner is liable for delays or damages caused by greater forces, such as:

  • Severe weather conditions
  • Disasters, such as fires or floods
  • Government orders or actions
  • Worker situations, such as a strike

Events like this change the nature of the project and the original contract. They could generate more costs for both the contractor and the property owner, as well as delay the contractor’s ability to complete the project on time. 

But a force majeure clause excuses contractors from continuing work in these changed conditions. This can help protect contractors—and property owners—from these unforeseeable events.

What you include in the clause is essential

However, simply adding a force majeure clause does not absolve either party of responsibility. A basic clause alone will also not help contractors avoid serious and costly contract disputes. 

When drafting this clause, contractors must customize it to the specific project. It might be helpful to include:

  • The process of informing either party about the event
  • The process and next steps after such an event
  • Possible solutions and strategies for moving forward
  • Possible reasons to terminate the original contract
  • Elements of renegotiating a new contract
  • Entitlements to an extension for the contractor

Improperly written clauses could pose a significant risk to both the contractor and the client. For example, if there is no instruction for how to notify the property owner about the event, contractors could be held liable for damages and face a legal dispute. 

The most critical tip: Discuss the clause with the client

It is not possible to cover every possible event in the force majeure clause. It is also not a good idea to try.

However, it is necessary to discuss the clause with the client. In the rare case that something happens that changes the site conditions, the force majeure clause helps prepare both parties for how to approach this situation. 

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