A recent article over on the Association of Corporate Counsel (ACC) website on the top ten force majeure imposters by Kate Henry Gonzalez caught my attention because it contains an expose on the ridiculous extensions to the standard force majeure clauses that have started to appear in standard contracts put forward by some suppliers. And while we should all agree that we need to be fair when truly exceptional situations do occur, this a difference between a category 5 hurricane that levels a data centre and two consecutive days of rain in a semi-desert. Seriously.
While each of the 10 situations outlined in the article should be avoided at all costs, the following five are my favourite:
- Abnormal Weather Conditions
Two consecutive days of rain is abnormal for Yuma, Arizona. Does that mean your shipment of widgets should be delayed a week? I don’t think so!Only extreme weather phenomenons like hurricanes, tornadoes, and tsunamis should count as force majeure.
- Telecommunication Error
The fax machine breaking down could be a telecommunication error. Does that mean the supplier should suspend operations for three days? Puh-leaze! Hook up a PC with a fax-modem or go buy a new one down the street at staples. 10-minute fix, tops!
- Broken Equipment
A knob falls of a handle, and all of a sudden the production line comes to a stand-still? Yeah. Right … Not! Put on a glove and crank the handle anyway. Fixed!
- Inability to obtain sufficient shipment capacity
Your supplier had fair warning that they had to ship your product to you on a certain date. If they forgot to reserve the capacity with their preferred carriers, too bad. They can pay the premium and use a different carrier.
- Unforeseen Market Conditions
No one can predict the market … that’s the risk that comes with doing business. If you can’t handle it, quit. But don’t cry foul when the price of oil increases 25% the next time a pipeline breaks. You knew it was bound to happen.
For more ridiculous situations that your supplier’s lawyers might be trying to slip into the force majeure clause, check out the article. You won’t be disappointed.