Construction projects don’t always go as planned. Sometimes, unexpected events like bad weather or supply delays can throw a project off schedule. That’s where a force majeure clause comes in. This part of a contract helps manage delays caused by things beyond anyone’s control. Let’s break it down in simple terms and look at an example to see how it works.
What is a Force Majeure Clause?
A force majeure clause is like a safety net in a construction contract. It gives contractors some breathing room when something unexpected happens, like a hurricane, a strike, or a sudden shortage of materials. These clauses usually outline what kinds of events qualify and what the contractor can do if one of those events occurs.
Force majeure clauses have two key parts:
- Scope: This is the list of events the clause covers. Some clauses are very detailed and list specific events like natural disasters or labor strikes. Others are broader and cover anything beyond the contractor’s control. Some clauses also say the event must be truly unexpected. Be careful with this requirement—in today’s world, what counts as “unexpected” can be tricky to define.
- Remedy: This is what the contractor gets if a force majeure event happens. Most clauses allow for more time to finish the project without penalties. However, they don’t usually cover extra costs, like replacing damaged materials or paying overtime to catch up. If you want the clause to include cost adjustments, you’ll need to negotiate that upfront.
Practical Example: How Force Majeure Works
Let’s say you own a construction company, BuildCo, and you’re building an office complex. Your contract says the project must be done by December 31. Then, a hurricane hits the area. It damages part of the building and delays the delivery of key materials.
Luckily, your contract has a force majeure clause that includes natural disasters. You notify the project’s architect about the situation and provide proof of the delays. The architect reviews everything and agrees to give you more time, moving the deadline to February 28.
But here’s the catch: the clause only covers extra time, not extra costs. BuildCo has to pay out of pocket for the damaged materials and overtime wages. If you had negotiated a clause that also covered these costs, you could’ve avoided that hit to your budget.
Tips for Contractors and Project Owners
- Make Sure the Clause Fits Your Needs: Check that the events listed are broad enough to cover common risks. Avoid clauses that are too restrictive or require events to be completely “unpredictable.”
- Decide on the Remedies: Think about whether the clause should cover just more time or also extra costs. If you want cost adjustments, make sure they’re written into the contract.
- Customize the Clause: Don’t just rely on standard templates. Tailor the clause to match the specific challenges of your project.
Force majeure clauses are an essential part of construction contracts. They help manage risks and reduce disputes when unexpected problems arise. By understanding and customizing these clauses, contractors and project owners can protect themselves and keep their projects on track.g smoother project completion.
DISCLAIMER: The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.
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