Anyone in the construction industry in Arkansas knows that the most carefully planned project can be thrown into chaos by a tornado or other extreme weather event. That’s why force majeure clauses are a crucial part of any construction contract.
A force majeure (literally, “superior force”) clause helps protect all signers to the contract when something beyond their control requires a project to be delayed, extended or scrapped completely and limits the cost they are required to bear if that happens. Force majeure clauses don’t exclusively address weather events or other “acts of God.” They can potentially cover unexpected material or labor shortages, price spikes and more.
What should the clause address?
Just having a “standard” force majeure clause isn’t enough. It’s important that it be specific, clear and thorough. For example, you’ll likely need to include details like:
- Under what conditions can it be invoked?
- How soon do the specified parties have to be notified that it’s being invoked?
- What are all parties’ responsibilities (financial and otherwise) if a project is delayed or canceled?
While things like a devastating tornado or wildfire can’t be predicted, some things can. That’s why you could risk some pushback – and potentially litigation – if you invoke the force majeure clause for something your client believes you should have anticipated – like a strike that would leave you without enough workers or a material shortage that was predicted. These are the kinds of things for which it’s wise to have a back-up plan in place to minimize disruption.
A good back-up plan is still important
A force majeure clause is one of those provisions that you need to have in case of a true emergency situation. However, you want to do everything possible to avoid having to use it. Even if you do have to, the better prepared you are with a back-up plan, the less likely it is that you or others involved in the project will face serious financial fallout.
Having experience legal guidance as you draw up the contract and if you do have to invoke this or any other clause can help prevent costly and time-consuming litigation and reputational harm to your business.