What is Force Majeure Clause in Contracts? Using AI for Effective Response
- Last Updated: Oct 13, 2025
- 15 min read
- Sirion
A crisis can strike at any moment, affecting your business’s ability to meet contract obligations. Without the right response, your organization can end up in hot water.
A force majeure clause in contracts offers relief by excusing or delaying performance when unforeseeable events occur. But drafting a force majeure declaration response must be done carefully and promptly to reduce liability. This is where advancements in AI-powered contract management can help.
Keep reading to see how you can use AI to declare force majeure more efficiently and protect your business.
Understanding Force Majeure
Force majeure definition: A clause that relieves a party from fulfilling its contract obligations when unforeseen events beyond either party’s control happen. To be able to enforce this clause, the event must check a few boxes.
Knowing what force majeure means is only half the story—understanding why it’s included in contracts is just as critical.
What is a Force Majeure Clause?
A force majeure clause is a contract provision that excuses or delays a party’s performance obligations when extraordinary events beyond their control make performance impossible. Unlike ordinary business risks, these events—natural disasters, pandemics, wars, or government interventions—are unforeseeable, external, and severe enough to disrupt operations entirely.
The clause protects both parties from being unfairly penalized for circumstances they could not have predicted or prevented, offering legal and commercial safeguards during crises.
Importance of Force Majeure Clause in Contracts
At its core, the importance of a force majeure clause is to protect both parties when extraordinary events disrupt business as usual. By defining which events excuse performance, the clause:
- Provides clarity in times of uncertainty
- Ensures fairness between contracting parties
- Supports business continuity planning
- Reduces the risk of disputes escalating into litigation
This built-in safeguard allows organizations to focus on managing the crisis rather than arguing over liability.
What are the Key components of a Force Majeure Clause?
For a force majeure clause to be effective and enforceable, it should include the following elements:
- Defined Events
- A list of events that qualify as force majeure (e.g., floods, earthquakes, cyberattacks, labor strikes).
- Avoid vague “catch-all” language that may cause disputes; instead, balance specificity with coverage.
- Causation
- The event must directly prevent contractual performance. A mere increase in cost or inconvenience is not enough.
- Relief and Consequences
- The clause should spell out whether obligations are suspended, deadlines extended, or the contract is terminated entirely.
Additional components often included:
- Notice Requirements: Clear guidelines on how and when notice must be given.
- Mitigation Duties: Expectation that the affected party takes reasonable steps to minimize disruption.
Benefits of a Force Majeure Clause
Key benefits of having a force majeure clause include:
- Risk reduction: Protects your organization from penalties when obligations cannot be met.
- Clarity of obligations: Clearly outlines what happens if an unforeseen event occurs.
- Preservation of relationships: Prevents conflicts with customers, suppliers, or partners by setting expectations upfront.
- Contract enforceability: Strengthens the overall resilience of agreements by addressing unpredictable scenarios.
By spelling out the rules of engagement in advance, force majeure clauses provide confidence that contracts can withstand external shocks.
Key Effects of a Force Majeure Clause
When invoked, a force majeure clause has several critical effects:
- Suspension or Release of Obligations: Temporarily halts or fully excuses performance without penalties.
- Risk Allocation: Shifts liability away from the affected party, protecting against claims for breach.
- Contract Continuity: Prevents premature termination of contracts, preserving long-term relationships.
- Litigation Prevention: Reduces the likelihood of disputes escalating into lawsuits.
Force Majeure vs. Hardship vs. Frustration
It’s easy to confuse force majeure clauses with other legal concepts such as hardship and frustration. Here’s how they differ:
| Clause | Meaning | Example Scenario | Relief Provided |
| Force Majeure | Excuses obligations when unforeseeable external events occur | Natural disaster halts delivery | Performance suspended or excused |
| Hardship Clause | Applies when performance becomes excessively burdensome but not impossible | Raw material prices triple unexpectedly | Renegotiation or adjustment |
| Frustration of Contract | Common law principle when contract purpose is destroyed | Venue for an event burns down before use | Contract discharged entirely |
Understanding these distinctions helps businesses know when force majeure contract law applies versus when renegotiation or frustration should be invoked.
While the concept is simple, drafting an effective force majeure clause requires careful attention.
Tips to Write a Force Majeure Clause in Contract
When crafting or reviewing a force majeure clause, keep the following in mind:
- Be specific, not vague: Overly broad wording may lead to disputes, while overly narrow language may exclude key risks.
- Industry alignment: A manufacturing contract might emphasize supply chain disruptions, while a tech contract may focus on cybersecurity or infrastructure failures.
- Notice requirements: Clearly define how and when notice must be given to avoid disputes about timing.
- Mitigation obligations: Ensure the clause requires reasonable steps to reduce the impact of the event, balancing fairness for both sides.
A carefully drafted clause not only reduces risk but also strengthens trust between contracting parties.
How to Declare and Enforce Force Majeure Clause and Avoid Liability
Declaring force majeure must be done carefully and in a specific amount of time to avoid further complications. Make sure you follow the right steps to avoid conflict.
1. Review and Asses the Event
The first step in declaring force majeure and limiting your liability is determining if the event meets the proper criteria. Examine the event to see if it meets the above requirements and move forward from there.
2. Gauge the Contract Clause Language
Force majeure clauses can vary depending on the parties’ contracting standards. Carefully review the specific language used in your contract to see how, if at all, you may be excused from fulfilling your contract obligations.
In some cases, the clause may be written in a way that only allows for obligation delays; in others, you may be fully excused.
3. Give Notice, If Necessary
Many clauses require the parties to give notice of a force majeure declaration a specific number of days before the event or within a certain time frame once the event is triggered.
Make sure you’re following terms and promptly give notice. If you don’t notify counterparties according to the contract terms, you may not be able to declare force majeure and can be held liable for unmet obligations.
4. Draft the Right Form of Notice
How you deliver your notice is just as important as when. Force majeure clauses may dictate the form of notice necessary, to whom the notice must be sent, and how it must be sent.
AI Contract Management: Automating Force Majeure Declarations
If a force majeure event occurs, your legal team must act quickly to protect the business and avoid further conflicts. But that’s impossible when legal teams are stuck manually searching for affected contracts.
Artificial intelligence lets you react with the scale and speed you need in the face of force majeure events. When crisis strikes, you can use AI to:
- Perform Contract Analysis: Extract data from and review thousands of contracts and identify specific language, clause details, and other key data points in minutes.
- Draft Reaction Documents: Use AI-powered contract authoring capabilities to create templates that declare force majeure or initiate a negotiation process to amend existing contracts.
- Establish Proactive Measures: Improve contract risk management programs and set up automations that alert you to which agreements have force majeure clauses in the first place.
Real-World Examples of Force Majeure in Contracts
When a force majeure event occurs, the affected party may be excused from performing its contractual obligations or allowed to delay performance without penalty. The clause essentially activates once it’s proven that the event was unforeseeable, beyond control, and directly prevented performance.
Some common scenarios include:
- Pandemics: A supplier unable to operate due to government lockdowns may suspend deliveries until restrictions ease.
- War and Geopolitical Conflict: Exporters may halt shipments if trade routes are blocked by conflict or sanctions.
- Natural Disasters: A construction company may delay work when a flood or hurricane damages the site.
- Labor Strikes: Transport providers may suspend services if strikes shut down critical infrastructure.
- Cybersecurity Incidents: An IT provider may be excused from SLA penalties if a major cyberattack disables systems.
- Government Actions: Manufacturers may pause production when sudden regulatory bans make it impossible to source key materials.
How Force Majeure Clauses Work Across Industries
While the principle of force majeure is the same everywhere, the way it plays out varies by industry:
- Construction: Protects contractors and developers when natural disasters, supply shortages, or labor strikes delay projects.
- Real Estate: Excuses landlords or tenants from obligations when government-mandated closures or disasters make properties unusable.
- Insurance: Shapes how insurers and policyholders handle payouts or exclusions when catastrophic events occur.
- Healthcare: Covers hospitals and suppliers when crises like pandemics or mass casualties disrupt medical services or supply chains.
- Oil & Gas: Addresses risks such as geopolitical conflict, pipeline failures, or natural disasters that halt exploration and transport.
- Transportation & Logistics: Applies when strikes, port closures, or geopolitical conflicts disrupt routes and delivery schedules.
- IT & Technology Services: Protects providers from SLA penalties when cyberattacks, infrastructure outages, or global disruptions affect service continuity.
Protect Your Business When Disaster Strikes with CLM
If global events like the COVID-19 pandemic taught us anything, it’s that crisis can hit at any moment. The real question is: are you ready to hit the ground running or will poor processes and legacy tech leave you slow to respond?
Don’t wait until you’re up against the clock. Contact our team to see how Sirion’s advanced AI and an efficient CLM can empower you to protect your business when facing a force majeure event.
Frequently Asked Questions (FAQs)
What happens in the case of absence of force majeure clause in service agreements?
If a service agreement does not include a force majeure clause, the affected party cannot automatically claim relief for non-performance. Instead, the dispute may fall back on general contract law principles (such as frustration of contract in common law) — which are harder to prove and may not excuse liability as clearly as a contractual clause would.
What is the difference between a force majeure clause and frustration of contract?
A force majeure clause is a contractual provision that excuses performance when certain unforeseen events occur. Frustration of contract, on the other hand, is a common-law principle applied by courts when the contract’s central purpose is destroyed, even if there’s no specific clause in the agreement.
Can you claim Force Majeure without a Clause?
Generally, no. Force majeure protections exist only if written into the contract. Without a clause, courts or arbitral tribunals may apply local legal doctrines, but these vary widely and rarely provide the same clarity or protection as a properly drafted clause.
Does force majeure apply to pandemics?
It depends on the contract wording. Some contracts explicitly include epidemics, pandemics, or government-imposed shutdowns as qualifying events, while others do not. If these terms are absent, parties may need to rely on other legal doctrines instead.
How do you declare force majeure in a contract?
You must follow the procedure laid out in your agreement, which usually involves giving timely notice in a prescribed format and providing evidence that the event qualifies as force majeure under the clause.
What is force majeure cancellation clause? When is it applied?
A force majeure cancellation clause allows a party to terminate the contract altogether if the disruptive event continues for an extended period (e.g., 60 or 90 days). It is applied when suspension or delay no longer makes sense because the purpose of the contract has been permanently affected.
Can AI help with force majeure declarations?
Yes. AI can rapidly scan a portfolio of contracts, identify which agreements contain force majeure clauses, extract key terms, and even draft initial notice templates. This reduces manual effort and speeds up response.
How have courts ruled on force majeure clauses?
Courts typically interpret force majeure clauses narrowly, focusing on the exact wording of the clause and whether the event was truly unforeseeable and beyond control. For example, some rulings during COVID-19 excused performance only where the contract explicitly mentioned “pandemic” or “government shutdowns,” while others denied claims based on general “acts of God” language.
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