Force Majeure Checklist: Your Contract MUST Satisfy This Test
A Checklist to help you when speaking to your local attorney.
Our goal has always been and will continue to be, to provide you will a broad overview of what education you need to protect your business legally. As COVID-19 continues to be a trying time across industries, many more questions have arisen about what to include in your contracts to prepare and protect your business. The resources at The Creative Law Shop® are provided for your education and are in no way legal advice. The number one action you can take to protect your business legally is to speak with a local attorney in your city and state.
It is important to be checking with your city and state at a local level as each city, state, and country have different regulations. Amid the pandemic, new regulations are consistently being implemented at each level. Our blog exists as an educational resource on legal topics that may affect your business, so you can have a better understanding of what local regulations to look for and what questions to ask your local attorney to keep your business compliant.
One of the most questioned provisions is force majeure.
No matter what kind of contract you have (or where you got it from)- you must ensure that your contract’s force majeure provision includes these points (note: you may download our free language available HERE. Please note that the language provided can be beefed up to include all of these provisions if you so wish!).
Now that many of us in the United States are unfortunately experiencing a rise in COVID cases once more, it’s time for us to ensure that our businesses are prepared. While COVID has quite literally changed our world, that does not mean all is for naught: now is the time to make sure that we use this as an opportunity to grow and strengthen our businesses. This month, you will see some case studies from what some of my personal clients are experiencing as we begin to litigate many of these COVID-related questions. For now, I want to focus on that oh-so-fun provision we all learned so much about this spring: your force majeure provision.
Make sure that your contract passes this test NOW:
There is a force majeure clause. You may download the free language HERE
Strongly consider adding a notice provision to your force majeure provision.
What to say: “In the event of a force majeure event (as specified herein), the Party wishing to invoke force majeure must provide the [other party name] with at least [#] days’ notice.”
Why? If a client wants to invoke your force majeure clause and thereby get out of the contract, you don’t want the rug entirely ripped out from under your feet. Notice provisions in force majeure clauses are incredibly common in corporate agreements- and you should be treating your business the same.
What happens upon receipt of notice? For example, do you, as the service provider, provide any sort of refund? Do you expressly NOT provide any sort of refund? Say so explicitly. Do you provide any deliverables created up to the point of the force majeure event?
Does the invocation of a force majeure event absolve the parties from any other potential liability? For example, any particular type of damages?
Note: If you’ve downloaded our free force majeure provision, you may note that a few of these points are missing. This is because the language we have provided is intended to be as strong as possible, while also providing for the incredibly wide range of business owners we work with. If any of the above points are missing from your contract, add them to your own. Please, check with an attorney in your state to ask how exactly your force majeure provision should be structured, as they are incredibly state-specific.
