The force majeure clause and your construction contract

On Behalf of | Mar 18, 2022 | Property Law

Sometimes, events beyond the control of the parties to a contract may prevent them from fulfilling their contractual obligations. Such events excuse the affected parties from performing the contract permanently or temporarily without legal consequences.

For instance, if you were contracted to build a house within a specified period, but heavy flooding prevents you from executing the contract, that is an act of God, which you do not have control over. It means that you cannot be held liable for breaching the contract.

Force majeure events include natural disasters such as floods, pandemices, earthquakes, hurricanes and man-made events like war, terrorism, global shortage of raw materials or government action. On the other hand, if an event was avoidable or the other party contributed to its occurrence, it cannot be said to be a force majeure, no matter the magnitude.

An force majeure does not automatically excuse non-performance

Having a force majeure clause does not mean that you should walk away from a contract if such an event occurs. Instead, you should be guided by the terms of your contract.

You need to follow any procedures and give enough notice as specified by the contract while also acting to mitigate the damages that result from the non-performance. For example, if you have been paid up front, you may be required to refund all or part of the payment.

Safeguarding your interests

If you cannot perform a contract due to reasons beyond your control, it is important to know whether you can invoke the force majeure clause. It may not always work in some cases, and you may be held liable for non-performance.

Therefore, it is essential to learn more about such clauses and ensure that they are carefully drafted in your contract to protect your interests.