If the Force Majeure Clause is properly written, with the help of a risk management specialist, then your contracts will be more robust. Is something happens and one of the party invokes Force Majeure, then there will be less discussions, less chances to enter into litigation, and the situation will be resolved faster and cheaper.

1. Riskope
Force Majeure Clause in Contracts
By F. Oboni & C. Oboni
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2. When an accident occurs we all want to
resolve the situation quickly and efficiently.
Sometimes litigation will make us waste
time and money... in the aftermath of an
accident.
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3. Litigation is usually started based on:
-Interpretation divergences
• -Improper lingo
-Omissions
•
Lawyers try to cover all possible issues
when writing contracts
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4. The Force Majeure clause is one of the
key elements in any commercial contract.
As Risk Managers we detect a widespread
lack of clarity in the formulation of the
clause of Force Majeure which can impair
accident resolution.
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5. The Force Majeure clause has potential to
reduce discussions and potential litigation
in the aftermath of an uncommon event,
which is equivalent to “sparing time”, or
reduce the impact of the mishap.
If addressed properly!
However let's see how it is addressed
now...
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6. From a contract:
...the term “event of Force Majeure” means an act of God,
action of the elements, strike, lockout, work stoppage or
other industrial disturbance, war , blockade, public riot,
lightning, fire, storm, flood,...
Then why not include: seismic, meteorological extremes
events, solar and nuclear radiation, terrorism, sabotage,
information warfare/hacking,...?
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7. The problem is that the list can expand to infinity...but in
practical terms it has to be written in such a way that:
The list of potential hazards which possibly lead to a Force
Majeure event is balanced: i.e. it has to be either generic
or detailed, but should be consistent).
But let's not stop here!
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8. From the same contract:
...the event was not due to the fault or negligence of the
affected party or requested, promoted or caused by it;
Negligence and fault : should be defined in this
particular contractual environment to avoid being
regarded, or not, as a Force Majeure!
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9. And also:
...such party has taken any reasonable precautions
against such event of Force Majeure and any
reasonable alternative measures of performing its
obligations;
Again reasonable precautions and reasonable
alternative: should be defined in this particular
contractual environment to avoid being regarded, or
not, as a Force Majeure!
And so on...
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10. Force Majeure, negligence, fault,
reasonable precautions, reasonable
alternative etc...
are all terms that need to be clarified
and defined before the contract is
signed.
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11. How to perform that task ?
Optimization will take the form of a more
detailed explanation of terms, definition of
threshold values (quantified), definition of
mitigative levels that are considered
“common practices” or “best practices”, and
therefore a definition of negligence, as well
as the limiting value of Force Majeure.
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12. Thus the optimization of Force Majeure
formulation constitutes an important proactive
mitigative measure with very large ROI
(Return On Investment).
It will reduce discussions and litigation in the
aftermath of an uncommon event, which is
equivalent to “sparing time”, or reduce the
impact of the mishap.
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13. Contact Riskope to discuss how we can
support you in optimizing your next contract's
Force Majeure clause.
coboni@riskope.com
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