Hurricane Season and the Force Majeure
It
is fall in the Southeast and for many of us that means hurricane season has
arrived. Last week’s visit by Hurricane
Dorian was a stark reminder of the impact that the weather can have on our
businesses and day-to-day operations.
Governors in the many of the southern states declared states of
emergency and mandatory evacuations went into effect throughout numerous coastal
counties. These types of events often
fall within the parameters of Force Majeure clauses that can be dismissed as “boilerplate
language” in most commercial contracts.
Force Majeure (pronounced fors ma-zehr)
is defined as an event or effect that can be neither anticipated nor
controlled. The term includes both acts
of nature and acts of people. These
types of provisions typically allocate the risk of loss if performance by the
parties becomes impossible or impracticable.
As a business owner, it is important to conduct annual reviews of such
provisions in a Company’s standard Terms and Conditions as well as in any
Supply Agreements or other commercial contracts to which a Company is a
party. Companies would be well advised
to be aware of any notice requirements, timing, or other actions that the other
Party could be permitted to take under the triggering of a Force Majeure
event. Depending on the type of
agreement, some provisions allow for a party to terminate a contract in the
event that performance is delayed or hindered for a specified amount of time. Contact BridgehouseLaw if you have questions
about your commercial contracts or how your Company may be impacted by Force
Majeure events.
By Kristin Whalen Associate Attorney
Image by: www.insurancejournal.com
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