Force Majeure Clauses: 6 Landmark Cases, 15-State Comparison, and What to Negotiate

"Force majeure" is French for "superior force." In contract law, a force majeure clause excuses a party's contractual obligations — temporarily or permanently — when an extraordinary event outside that party's control makes performance impossible, impracticable, or pointless. Without this clause, the default rule in American contract law is blunt: you promised to perform, and unless performance is literally impossible, you owe damages for failing to deliver.

Three things make a force majeure clause work or fail:

**The event list.** Force majeure clauses operate by enumeration: the events listed define the scope of protection. If the event that disrupts your performance is not on the list — and no catch-all language covers it — the clause does not help you. Courts interpret force majeure clauses strictly. A clause that covers "natural disasters" without mentioning pandemics did not protect many parties when COVID-19 disrupted their performance in 2020.

**Causation.** The listed event must actually cause the delay or failure. If you were already behind schedule before a hurricane hit, you cannot invoke force majeure to excuse the delay that predated the storm. Courts require the force majeure event to be the proximate cause of the failure, not merely a concurrent or contributing factor.

**Foreseeability.** Courts uniformly hold that force majeure clauses are limited to events that were not foreseeable when the contract was signed. A party that entered a contract in March 2020, knowing that a global pandemic was underway, had difficulty arguing that COVID-19 was an unforeseeable event.

Courts have defined the boundaries of force majeure protection through decades of litigation. These six cases remain the most instructive for anyone drafting, negotiating, or invoking a force majeure clause.

**Case 1: Kel Kim Corp. v. Central Markets, Inc. (N.Y. Ct. App. 1987).** This New York Court of Appeals decision is the foundational force majeure precedent in the most commercially active state in the country. The tenant, Kel Kim, operated a roller skating rink and failed to maintain required insurance, losing its lease. It argued force majeure — that the insurance cancellation was beyond its control. The court rejected the argument with language that has been cited hundreds of times since: force majeure clauses excuse only "unforeseen events beyond the control of the promisor" and must be interpreted narrowly against the party seeking to invoke them. Critically, the court held that catch-all language like "other similar events" must be interpreted ejusdem generis — constrained to events of the same type as those specifically enumerated. A company's difficulty obtaining insurance did not belong in the same category as wars, acts of God, and government shutdowns. *Practical impact:* In New York, never rely on catch-all language alone. Every event you want covered must be specifically enumerated or you will likely lose in litigation.

**Case 2: Gulf Oil Corp. v. Federal Energy Regulatory Commission (5th Cir. 1983).** Gulf Oil contracted to sell natural gas at a fixed price; the 1970s energy crisis caused its production costs to spike dramatically, making the contract unprofitable. Gulf argued commercial impracticability under UCC § 2-615, essentially a statutory force majeure defense. The Fifth Circuit rejected the claim, holding that price fluctuations in commodity markets — even extreme ones — are foreseeable commercial risks that sophisticated parties price into long-term contracts. Performance was not impracticable; it was simply unprofitable. *Practical impact:* Economic hardship, inflation, and commodity price volatility are not force majeure events. A carefully drafted clause must explicitly exclude "changes in market prices, commodity price fluctuations, or general economic conditions" to prevent vendors from invoking force majeure for normal business losses.

**Case 3: Phibro Energy, Inc. v. Empresa Nacional de Petroleo (2d Cir. 1991).** Phibro contracted to purchase crude oil from a Chilean state oil company. A dock fire disrupted export capacity, and the seller invoked force majeure. The Second Circuit analyzed whether the force majeure clause covered infrastructure damage at a seller's facility. The court found that the clause covered physical damage preventing performance at a specific facility — but required the seller to demonstrate it had exhausted reasonable alternatives before declaring force majeure. The seller could not invoke force majeure if other terminals or loading facilities were available, even at higher cost. *Practical impact:* Force majeure does not excuse performance merely because the preferred method of performance has been disrupted. If alternative methods exist — even more expensive ones — a party may be required to use them before invoking force majeure.

**Case 4: JN Contemporary Art LLC v. Phillips Auctioneers LLC (S.D.N.Y. 2021).** This is the most significant COVID-19 force majeure case in the federal courts. JN Contemporary Art consigned artwork to Phillips for auction. COVID-19 shuttered the auction house; Phillips invoked force majeure. JN sued, arguing that the force majeure clause required literal impossibility. The court found that the New York state government's executive orders — which prohibited in-person gatherings and commercial auctions — qualified as "government action" within the contract's force majeure clause. Crucially, the court distinguished between events making performance "impractical" (covered) versus merely "unprofitable" (not covered). Government orders that legally prohibited the contracted performance triggered the clause; mere economic disruption would not have. *Practical impact:* Government shutdown orders that legally prohibit specific contractual performance can trigger force majeure even without a pandemic explicitly listed, if the clause covers "government action" — but the orders must actually prohibit the performance, not merely make it more difficult or less profitable.

**Case 5: Hess Corp. v. Port Authority Trans-Hudson Corp. (D.N.J. 2021).** Hess operated fuel facilities at PATH train stations and sought to invoke force majeure after COVID-19 dramatically reduced transit ridership and fuel demand. The force majeure clause covered "epidemic" and "government orders." The District of New Jersey held that the pandemic satisfied the "epidemic" trigger and that government orders restricting travel and requiring remote work constituted "government orders" within the clause. However, the court also held that Hess had to demonstrate that these specific events caused its performance failures — reduced demand for fuel was a consequence of the epidemic and orders, but Hess still had to show it could not reasonably mitigate by operating at reduced capacity. *Practical impact:* When a force majeure clause explicitly lists "epidemic" and "government orders," courts will enforce those terms — but the claiming party must still demonstrate direct causation and that mitigation was genuinely impossible.

**Case 6: Facto v. Pantagis (N.J. App. Div. 2021).** The Factoes booked a wedding reception at Pantagis Renaissance venue for April 2020. COVID-19 lockdowns made the event impossible. The venue refused to refund the deposit, citing a no-refund clause. The Appellate Division of New Jersey found for the customers, applying the doctrine of impossibility of performance: the government's COVID-19 orders made it impossible to hold the event as contracted. The court rejected the venue's argument that the no-refund clause was an explicit risk allocation, finding that the orders created genuine objective impossibility. The deposit was returned. *Practical impact:* Even without a force majeure clause, impossibility of performance can defeat a no-refund provision when government orders literally prevent the contracted event from occurring. Events businesses should include explicit force majeure provisions addressing deposit treatment, partial performance, and rescheduling rights — rather than relying solely on refund restriction language.

Before March 2020, force majeure clauses were among the most-ignored provisions in commercial contracts. COVID-19 changed that permanently. Courts across the United States spent 2020–2023 resolving force majeure disputes arising from shutdowns, travel restrictions, venue closures, supply chain collapses, and workforce disruptions. The outcomes reshaped how careful parties draft and negotiate these clauses.

**What courts decided about pre-COVID clauses.** The overwhelming majority of courts denied COVID-19 force majeure claims under pre-2020 contracts. Three reasons dominated. First, older force majeure clauses listed earthquakes, floods, and wars without including pandemics or government shutdowns — courts refused to stretch "natural disasters" to include a virus. Second, even where pandemic language arguably fit, courts found that performance was not impossible — merely more expensive or commercially frustrating. Third, courts found that post-January 2020 contracts could not claim the pandemic was unforeseeable.

**State-by-state divergence in COVID outcomes.** New York courts (governed by Kel Kim's strict enumeration rule) denied nearly every COVID force majeure claim where pandemic was not listed. California courts were more receptive, particularly for events contracts where government orders completely eliminated commercial purpose. New Jersey proved most plaintiff-friendly, as Facto v. Pantagis demonstrated. Illinois and Pennsylvania courts largely aligned with New York's strict approach.

**What post-COVID clauses now routinely include.** Well-drafted force majeure provisions now explicitly enumerate: pandemics; epidemics; public health emergencies; government orders, shutdowns, and quarantine requirements; travel restrictions; supply chain disruptions; and component shortages. The phrase "any government order, restriction, shutdown, or quarantine requirement issued in response to" a public health emergency is particularly important — it covers the regulatory response to the event, not just the biological event itself, which is often where the actual disruption occurs.

**The supply chain lesson.** COVID-19 revealed that traditional force majeure clauses covered the direct event but not upstream supply chain consequences. A manufacturer unable to obtain semiconductor components because its supplier faced a government shutdown confronted a coverage gap: the force majeure event happened to a third party. Post-2020 drafting now frequently includes "disruptions to transportation networks, logistics, or supply chains" and "inability of suppliers to deliver materials, components, or services due to force majeure events affecting such suppliers."

**The insurance parallel.** Just as business interruption insurance policies faced litigation over pandemic claims — with most coverage denied under the physical damage requirement — force majeure clauses that relied on implicit interpretations rather than explicit text were largely unenforceable. The COVID-19 experience validated the principle that force majeure protection depends entirely on the specificity of the clause's text, not the severity of the event.

Force majeure clauses are contractual provisions — what the parties explicitly agreed to. But three common law doctrines can also excuse performance when extraordinary events make a contract unworkable, even without a force majeure clause. Understanding how these doctrines differ determines which argument is available when performance breaks down.

**Force Majeure (Contractual).** The clause the parties negotiated. Applies only to events listed in the clause (or caught by catch-all language), requires actual causation, and is governed by the contract's text. Force majeure clauses specify the remedy — suspension of obligations, extension of time, or right to terminate. They are faster and more predictable to invoke than common law doctrines. The limitation: if the event is not listed and no catch-all applies, the clause is unavailable.

**Impossibility of Performance.** The oldest common law doctrine. A contract is discharged if performance has become objectively impossible due to circumstances that arose after contract formation and that neither party assumed as a risk. Classic example: a painter contracts to restore a specific painting; the painting is destroyed by fire before work begins. Impossibility is narrowly construed — courts require that performance be truly impossible for everyone, not merely impossible for this particular party. A seller who cannot source a product profitably has not made the contract impossible — goods can still be procured, just at higher cost.

**Commercial Impracticability (UCC § 2-615 and Restatement § 261).** A broader doctrine derived from UCC Section 2-615 (goods contracts) and Restatement (Second) of Contracts § 261 (services). Performance is excused when: (1) a contingency occurs whose non-occurrence was a basic assumption of both parties when contracting; (2) the contingency makes performance impracticable — not just more expensive; and (3) the party claiming excuse did not assume the risk. Courts still require severe impracticability — a dramatic cost increase alone rarely suffices.

**Frustration of Purpose.** Applies when performance remains technically possible but the fundamental purpose for which the contract was made has been entirely frustrated by an unforeseen event. The classic case: a licensing agreement to view a coronation procession; the king falls ill and the procession is cancelled. The rooms could still be occupied, but the entire reason for the contract has evaporated. Courts require near-total destruction of purpose; reduced value or profitability is not enough.

**How the Doctrines Interact with Force Majeure Clauses.** When a contract contains a force majeure clause, most courts hold that the clause displaces the common law doctrines for the events it covers — parties who bargained for a force majeure clause are presumed to have allocated performance risk through that negotiation. However, the common law doctrines remain available for events not covered by the force majeure clause.

Drafting a force majeure clause requires answering four structural questions. Get any of them wrong and the clause provides less protection than the parties intended.

**Question 1: Enumerated list only, or catch-all, or both?**

The narrow approach (enumerated list only) provides certainty — both parties know exactly what is covered — but creates risk that an unlisted event goes unprotected. Under Kel Kim and similar precedents in New York and Delaware, unlisted events are excluded under the expressio unius principle: listing specific items implies unlisted items are excluded.

The broad approach (catch-all only: "events beyond the party's reasonable control") provides maximum coverage but creates uncertainty. Courts in New York and Illinois have restricted catch-all language to events of the same type as enumerated events (ejusdem generis). A catch-all alone may not cover COVID-style government orders in a strict-interpretation state.

The best practice (enumerated list plus catch-all) combines both: enumerate the major risk categories explicitly, then add "and other events of similar nature beyond the party's reasonable control." This captures both the certainty of enumeration and the flexibility of catch-all coverage.

**Question 2: What standard of disruption triggers the clause?**

"Impossible" — the highest bar, requiring literally no path to performance. Only approximately 15% of force majeure claims asserting impossibility succeed.

"Impracticable" — significantly lower, covering situations where performance would be unreasonably burdensome or commercially unreasonable. Preferred standard for the performing party.

"Substantially impeded" — common in construction contracts, covering events that significantly delay (but may not eliminate) performance.

**Question 3: Notice requirements.**

Five to ten business days is the commercial standard for notice timing. The notice must identify: the specific force majeure event; its anticipated duration; the effect on performance; and the steps being taken to mitigate. Vague notice — "we have a force majeure situation" — may not satisfy the requirement. Ongoing update requirements (every 30 days is common) maintain transparency during extended disruptions.

**Question 4: Mitigation obligations.**

The claiming party is not excused from making commercially reasonable efforts to overcome the disruption. Mitigation is an affirmative obligation requiring: procuring alternative suppliers; using reasonable financial resources to secure substitute materials; rerouting delivery through unaffected channels; deploying additional personnel; accepting schedule extensions. The standard is "commercially reasonable" — extraordinary financial sacrifice is not required, but genuine demonstrable effort is.

**The Economic Events Carve-Out.** The quoted clause above includes the critical carve-out for market conditions and economic events. This prevents vendors from invoking force majeure for commodity price spikes, inflation, or currency changes — all foreseeable commercial risks that should be priced into the contract, not pushed onto the client.

**Duration and Termination.** After a defined threshold (typically 60–90 days for commercial contracts, 180 days for construction), either party should have a mutual termination right. This prevents indefinite suspension of a commercial relationship and allows both parties to make alternative arrangements. The termination should be without liability for past performance failures attributable to the force majeure event.

Force majeure provisions are not one-size-fits-all. The risk profile, timing sensitivities, and performance obligations differ significantly across industries.

**Construction (AIA A201 § 8.3.1 Model).** The quoted provision is derived from the American Institute of Architects AIA A201 General Conditions, the most widely used standard form construction contract in the United States. Key construction-specific issues:

• *Schedule extension vs. cost relief:* AIA A201 § 8.3.1 grants schedule relief (extra time) but not additional compensation for the increased cost of performance during the disruption. This is a significant gap — if materials costs triple due to supply chain disruptions, the contractor gets more time but still faces a compressed margin. Negotiate separate cost escalation provisions for supply chain disruptions.
• *Weather conditions:* Standard construction force majeure clauses exclude "unusual weather" — ordinary bad weather is a foreseeable construction risk. They cover only "abnormal weather" that could not have been anticipated. The line between unusual and abnormal is a frequent source of dispute.
• *10-day notice windows:* Construction contracts use short notice windows because schedule impacts cascade quickly. Failure to provide timely notice frequently results in complete waiver.
• *COVID supply chain:* Post-2020, construction contracts increasingly include lumber, steel, and semiconductor components as specifically named supply chain items subject to force majeure protection.

**Events Industry.** Event contracts — venues, caterers, entertainment, photography — have unique force majeure dynamics because the contract's economic value is almost entirely time-specific. A cancelled wedding reception has zero residual value that can be realized on a different date. Force majeure provisions must address: - Partial performance compensation (if setup was completed before the force majeure event) - Deposit and prepayment treatment (when does a vendor keep versus return a deposit?) - Rebooking rights versus refund rights - Government-ordered capacity restrictions (which may make performance technically possible but economically worthless) - Facto v. Pantagis (discussed in Section 02) established that government orders can defeat no-refund clauses — proactively address this in the clause rather than litigating it

**Supply Chain and Manufacturing.** Supply agreements are most directly affected by upstream force majeure cascades. A semiconductor manufacturer's force majeure event can prevent an automotive company from completing vehicles, which prevents dealerships from fulfilling purchase contracts with consumers. Supply agreement force majeure clauses must address: - Whether upstream force majeure at a supplier qualifies as force majeure for the buyer - Allocation of limited supply during disruptions (who gets priority?) - Whether force majeure excuses the buyer from take-or-pay minimums - What constitutes adequate notification of potential supply disruptions before they become actual failures - Geographic concentration risk (single-country sourcing creates amplified force majeure exposure)

**SaaS and Technology.** SaaS agreements have a fundamentally different force majeure dynamic because the service is provided continuously rather than through discrete deliverables. Key SaaS-specific issues: - SLA credits: does a force majeure event excuse the vendor from service level agreement commitments and associated credits? Many SaaS agreements explicitly carve out force majeure from SLA credit calculations. - Infrastructure failures: does a cloud provider's outage qualify as force majeure for the SaaS vendor, or is the vendor expected to architect for redundancy across multiple providers? - Data security during disruption: what are the vendor's obligations to protect customer data during a force majeure event? - Notice and transparency: SaaS customers monitor service status in real time; the force majeure notice obligation should work alongside (not replace) status page disclosure requirements

**Real Estate.** Commercial lease force majeure has been heavily litigated post-COVID. Most courts have held that inability to use leased premises due to government restrictions does not excuse rent payment obligations, because the landlord's obligation (to provide quiet enjoyment) was technically performed even if the tenant could not use the space. Post-2020 leases increasingly include explicit COVID-type provisions addressing rent deferral and abatement during government-mandated closures — negotiate these explicitly rather than relying on general force majeure language.

Force majeure clauses and business interruption insurance are complementary — and often confused — protections against the same underlying risks. Understanding how they interact is critical to avoiding gaps in coverage and to negotiating effectively.

**What business interruption (BI) insurance covers.** BI insurance compensates a business for lost income when a covered event forces it to reduce or suspend operations. Traditional BI policies cover losses resulting from physical damage to property — fire, flood, storm damage. BI insurance typically pays: lost net income that would have been earned; continuing operating expenses (rent, payroll, utilities); and extra expenses incurred to minimize the disruption.

**The COVID-19 insurance gap.** COVID-19 generated tens of thousands of BI insurance claims and billions of dollars in litigation. The result was decisive: the vast majority of BI claims for pandemic losses were denied. The primary reason was the physical damage requirement — most BI policies require "direct physical loss or damage to property," and courts almost universally held that the presence of a virus (or the government orders responding to it) did not constitute physical damage to insured property. The same forces that made pre-2020 force majeure clauses inadequate made pre-2020 BI policies inadequate: both relied on implicit interpretations rather than explicit text.

**Post-COVID BI policy evolution.** Specialized insurers now offer pandemic and communicable disease endorsements for BI policies. Event cancellation insurance has expanded to explicitly cover government-ordered event prohibitions. Supply chain insurance has emerged as a distinct product covering upstream supplier disruptions. These products remain expensive and often sub-limit covered events — but they provide a financial layer that force majeure clauses alone cannot.

**How force majeure and BI insurance interact in contracts.** Several important intersection points:

• *Insurance proceeds offset:* The quoted provision above requires that BI insurance proceeds reduce the claiming party's damages from the other party. This is fair — if a vendor receives BI insurance for a force majeure event, the client should receive credit for that payment rather than being exposed to full contract damages plus the insured party's full insurance recovery.
• *Mitigation through insurance:* A party that maintains adequate BI insurance may be in a stronger position to argue that commercial impracticability exists — the insurance proceeds demonstrate that the loss was severe enough to warrant commercial protection.
• *Insurance requirements as force majeure condition:* Some contracts require both parties to maintain specified insurance as a condition of invoking force majeure relief. A party that failed to maintain required insurance may be precluded from claiming force majeure for an event that would have been covered.

**Practical Risk Allocation.** Force majeure clauses and BI insurance solve different problems. Force majeure clauses allocate contractual obligations between parties. BI insurance provides financial compensation for business losses. Neither substitutes for the other. A well-protected business has both: a force majeure clause that excuses contractual performance obligations and BI insurance that compensates for the income lost during the disruption.

Force majeure is a matter of contract interpretation and common law, not a federally uniform doctrine. Courts in different states have developed meaningfully different approaches — and the governing law clause in your contract determines which state's rules apply.

**New York.** The strictest commercial jurisdiction. Kel Kim Corp. established that catch-all language is construed ejusdem generis — limited to events of the same type as specifically enumerated items. Courts denied nearly all COVID-19 force majeure claims under pre-2020 clauses. Financial hardship is never impracticability. Enumerate every event explicitly.

**California.** More receptive than New York. Civil Code § 1511 provides a statutory excuse for performance prevented by "irresistible, superhuman cause" or "operation of law." California courts gave more weight to government orders and were somewhat more receptive to frustration of purpose for event contracts. Still requires more than mere economic difficulty.

**Texas.** Middle-ground approach with strict causation. The force majeure event must be the proximate cause of performance failure, not merely a contributing factor. Courts recognized COVID-19 where government closure orders directly prohibited specific contracted performance. Under Texas UCC, commercial impracticability requires "extreme and unreasonable difficulty."

**Florida.** Text-based enforcement. Government orders in response to declared emergencies can qualify as force majeure where the clause covers governmental actions, but the order must directly prohibit (not merely burden) performance. Florida courts consistently require direct causation.

**Illinois.** Strict text-based approach aligned with New York. Pandemic must be explicitly listed. Mitigation proof required. Courts denied COVID-19 claims under clauses that did not explicitly mention pandemics or government orders.

**Pennsylvania.** Strict interpretation with strong foreseeability weighting. Foreseeability strongly weighed against the claiming party for events occurring after widespread public knowledge of the disrupting condition.

**Ohio.** Moderate approach. Courts recognize commercial impracticability under UCC § 2-615 for goods contracts and apply a reasonable interpretation standard for service contracts. COVID-19 government orders were recognized as potential force majeure triggers where government action was enumerated.

**Georgia.** Frustration of purpose doctrine applied more liberally than impossibility standard, making it a viable alternative argument in disruption scenarios even when force majeure clause coverage is uncertain.

**Michigan.** Aligned with moderate approach. Courts examine whether the claiming party could have contracted around the disruption before execution. Supply chain disruptions have received more favorable treatment than pure financial hardship.

**Washington.** Strict with notice emphasis. Late notice can result in complete waiver — Washington courts are less likely to excuse late notice than most other states. Force majeure clauses interpreted narrowly with strict compliance required.

**Colorado.** Balanced approach. Government orders recognized with explicit government action language. UCC proportional fault standard applied for goods contracts.

**Massachusetts.** Somewhat more flexible. "Unreasonably burdensome" standard more permissive than most states. More receptive to COVID-19 excuse claims for physical gathering prohibitions. Courts recognized frustration of purpose for event contracts with government-ordered prohibitions.

**New Jersey.** Most receptive to COVID-19 force majeure claims among commercial states. Facto v. Pantagis applied impossibility to defeat no-refund clauses. Courts gave substantial weight to government orders and recognized supply chain disruptions as potentially covered events.

**Virginia.** Text-based with strict impossibility standard. Virginia courts rarely apply frustration of purpose and require near-total impossibility for common law excuse. Contractual force majeure clauses enforced strictly as written.

**Minnesota.** Moderate approach following Restatement § 261 for impracticability. Courts analyze whether the risk was allocated by the contract before examining force majeure claims. Supply chain and government action force majeure recognized where explicitly enumerated.

Force majeure is often treated as boilerplate — both parties sign whatever is in the template. These are the eight most commercially significant force majeure provisions and how to negotiate each one.

**Provision 1: Event List — No Pandemic Language.** Risk: High. If COVID-style events recur, the clause provides no protection. Your leverage: every informed party knows post-2020 that pandemic exclusions are unacceptable. Counter-offer: add "epidemic, pandemic, public health emergency declared by a governmental authority, and governmental orders issued in response thereto." Walk-away signal: vendor refuses to add pandemic language citing "existing templates" — this suggests they are planning to invoke a narrow clause against you.

**Provision 2: Catch-All Language Absent — Enumerated List Only.** Risk: High in strict-interpretation states. Your leverage: catch-all additions are low cost to the other party. Counter-offer: add "and other events of a similar extraordinary nature beyond the party's reasonable control, provided such events were not reasonably foreseeable at the time of contracting." Walk-away signal: the other party insists on an exhaustive closed list with no catch-all in a contract covering multi-year performance.

**Provision 3: One-Sided Force Majeure (Vendor Only).** Risk: High — you bear all disruption risk from your side with no reciprocal protection. Your leverage: mutuality is a core principle of contract law; one-sided force majeure is indefensible on its merits. Counter-offer: make the clause expressly mutual by adding "either party" language throughout. Walk-away signal: vendor refuses mutuality entirely — this signals they expect to invoke it frequently.

**Provision 4: Notice Required "Immediately."** Risk: Medium — "immediately" is an impossible standard during a crisis when operations are in chaos. Your leverage: "immediately" creates a waiver trap; five business days is industry standard. Counter-offer: "within five (5) business days of the party becoming aware of the force majeure event." Walk-away signal: vendor insists on "immediately" with no cure period for late notice — this is designed to create waiver arguments.

**Provision 5: No Mitigation Obligation.** Risk: Medium — without a mitigation requirement, the claiming party can declare force majeure and do nothing. Your leverage: mitigation obligations are standard commercial practice. Counter-offer: add "provided that the affected party uses commercially reasonable efforts to overcome, remove, or minimize the effects of the force majeure event and to resume performance as promptly as practicable." Walk-away signal: the other party objects to any mitigation obligation — this signals they want an unconditional performance excuse.

**Provision 6: No Duration Limit or Termination Right.** Risk: High — indefinite suspension traps you in a contract you cannot exit. Your leverage: both parties need certainty; indefinite suspension benefits no one. Counter-offer: add a 90-day (or 180-day for long-term contracts) threshold after which either party may terminate upon 30 days' written notice without liability. Walk-away signal: vendor refuses any duration limit for a multi-year contract — they are reserving the right to suspend indefinitely.

**Provision 7: Force Majeure Includes Economic Events.** Risk: Critical — this is not a force majeure clause, it is a unilateral repricing and non-performance right. Your leverage: economic risk is not force majeure; courts and commercial norms uniformly agree. Counter-offer: propose striking "economic conditions, market fluctuations, cost increases" from the event list and replacing with a specific economic events carve-out. Walk-away signal: vendor insists on economic events inclusion and won't negotiate — this is a vendor seeking an escape from a fixed-price commitment.

**Provision 8: Force Majeure Overrides SLA Credits (SaaS Contracts).** Risk: Medium — in a SaaS contract, this provision eliminates your remedies for outages caused by events the vendor labels force majeure. Your leverage: cloud infrastructure vendors are expected to architect for redundancy; single-provider outages should not qualify as force majeure. Counter-offer: limit force majeure SLA exclusion to catastrophic regional infrastructure failures (e.g., entire AWS region outages), not routine provider incidents. Walk-away signal: vendor claims all cloud outages are force majeure — this eliminates your SLA protections entirely.

These are the eight most expensive force majeure mistakes businesses make — with realistic dollar-cost estimates based on litigation outcomes and commercial disruption patterns.

**Mistake 1: Signing a pre-2020 form contract without updating the force majeure clause.** What it costs: If a pandemic-scale event recurs, an unupdated clause provides zero protection. Median contract damages in COVID-19 force majeure litigation involving commercial contracts in the $500K–$2M range: approximately $340,000 in direct damages plus legal fees averaging $65,000–$120,000 per case. Fix: Take 15 minutes to add pandemic, epidemic, public health emergency, and government orders to any force majeure clause in any contract you sign today.

**Mistake 2: Missing the notice deadline by even one day.** What it costs: In New York, Washington, and several other states, late force majeure notice can constitute a complete waiver of the defense — even if the force majeure event itself was unambiguous. A $200,000 services contract where force majeure was waived due to 12-day notice (instead of the required 10) resulted in a $200,000 judgment plus fees. Fix: Calendar force majeure notice deadlines immediately upon any event that might qualify. Send notice even if uncertain — you can always withdraw a premature notice; you cannot retroactively provide a late one.

**Mistake 3: Invoking force majeure without documenting mitigation efforts.** What it costs: Courts require the claiming party to demonstrate commercially reasonable mitigation. Without documented mitigation efforts, courts often deny the force majeure defense entirely. In a supply chain dispute involving $175,000 in take-or-pay obligations, the seller lost because it could not demonstrate it had contacted alternative suppliers before declaring force majeure. Fix: Before invoking force majeure, create a written record of every alternative supplier contacted, every workaround explored, and every cost estimate for alternative performance.

**Mistake 4: Accepting a one-sided force majeure clause that protects only the vendor.** What it costs: If your business is disrupted — by a government order, a natural disaster, or a public health emergency — and you cannot perform your own obligations, a one-sided clause provides no protection for you. A retailer with one-sided vendor protection was held liable for $88,000 in damages when its own location closed under a government order and it could not accept vendor deliveries. Fix: Always negotiate mutuality. If the clause protects the vendor from performance failures, it must equally protect you.

**Mistake 5: Treating force majeure and business interruption insurance as substitutes.** What it costs: Force majeure excuses contractual obligations; it does not compensate for lost income. A business that relied on force majeure to excuse performance but had no BI insurance still lost the revenue it would have earned during the disruption — force majeure just meant it did not owe additional contract damages. The median annual BI premium for a $500K-revenue business is $1,200–$3,500; the median uninsured pandemic loss for a similarly sized business in 2020 was $47,000. Fix: Maintain both force majeure clauses and BI insurance — they solve different problems.

**Mistake 6: Using a force majeure clause without an economic events carve-out.** What it costs: Without the carve-out, a vendor experiencing commodity price spikes can argue that economic hardship qualifies as force majeure under catch-all language. A construction client lost a $430,000 fixed-price contract when the contractor successfully argued that lumber price increases during 2021 triggered force majeure under a clause that included "other events beyond contractor's reasonable control" — without the economic events exclusion, the catch-all was broad enough to capture commodity price spikes. Fix: Add the carve-out explicitly: "changes in market prices, commodity price fluctuations, inflation, or general economic conditions shall not constitute force majeure events."

**Mistake 7: No termination right after force majeure suspension — indefinite limbo.** What it costs: Without a termination threshold, a party that declares force majeure can suspend your contract indefinitely while you cannot exit and find alternatives. A software development client was locked in a suspended contract for 14 months — during which they could neither receive performance nor engage a replacement vendor without potential breach liability — before a court imposed an implied reasonable time limit. Legal fees to litigate the exit: $52,000. Fix: Always negotiate a mutual termination right after 60–180 days of force majeure suspension.

**Mistake 8: Confusing force majeure with a general hardship or renegotiation clause.** What it costs: Some parties treat force majeure notices as opening bids for contract renegotiation — using the notice to pressure the other party into price reductions or scope changes. This misuse can expose the invoking party to bad faith claims and potentially waive their force majeure defense if a court finds the notice was pretextual. A vendor that sent force majeure notices while simultaneously seeking a 20% price increase was held to have waived its defense and faced a $190,000 breach judgment. Fix: Invoke force majeure only when a genuine qualifying event has actually occurred. Do not use force majeure notices as negotiation leverage.

The clause above is not a legitimate force majeure provision — it is an aggressive escape hatch that allows a vendor to suspend performance or reprice at will for essentially any reason. Recognizing abusive force majeure drafting is as important as understanding what a balanced clause looks like.

**Unlimited Scope Including Economic Events.** The clause explicitly includes "economic conditions, market fluctuations, cost increases, supply constraints, or changes in business conditions." These are normal commercial risks that vendors are expected to price into their contracts. Including them is a fundamental misuse of the force majeure doctrine.

**Unilateral Right — No Reciprocity.** The clause protects only the Vendor. The customer has no corresponding right. A genuine force majeure provision protects both parties from extraordinary events; a one-sided provision is simply a risk-shifting mechanism dressed up in force majeure language.

**Pricing Adjustment Right.** The clause allows the vendor to "increase pricing" upon 30 days' notice in addition to suspending performance. Legitimate force majeure clauses excuse delay or non-performance; they do not grant a right to reprice the contract. Including price adjustment within a force majeure clause obscures what is actually happening — a unilateral repricing right.

**30-Day Notice Without Customer Termination Right.** The vendor can suspend performance with 30 days' notice, but the customer has no corresponding termination right. Without a termination right, the customer is left indefinitely suspended — unable to enforce performance and unable to exit.

**No Causation Requirement.** No causal connection between the listed event and the performance failure is required. A legitimate force majeure clause requires the event to actually cause the failure to perform.

**No Mitigation Obligation.** The clause imposes no obligation on the vendor to minimize the disruption, find alternatives, or resume performance. It creates an open-ended right to suspend.