Force majeure provisions are often overlooked, but when drafted and invoked properly, they can be useful risk allocation tools. In the construction context, they can be used to allocate risk in case of a shortage of raw materials, extreme weather or a labour strike, among other events. Force majeure clauses excuse a party’s performance under a contract in full or in part, to the extent that the failure to perform is due to certain circumstances outside of the party’s control. Generally, reliance upon a force majeure clause requires that one or more of the following conditions be fulfilled:
- the specified event is beyond the control of the claiming parties;
- the event prevents or delays, in whole or in part, the performance of the contract;
- the event makes performance of the contract imprudent, substantially more difficult or substantially more expensive;
- the event was not due to the fault or negligence of the claiming party; and
- the claiming party has exercised reasonable diligence to overcome or remove the specified force majeure event.