Why NOTICE Is Crucial In A Force Majeure Clause!
It’s safe to say that we all learned a lot in the past year about running a business when a ‘Force Majeure Event’ comes barreling in. The pandemic affected everyone throughout the world in many different ways and taught us as business owners many lessons. One of the lessons we learned was just how important Force Majeure is, and subsequently how important it is to include language about Force Majeure in your business contracts. While it is absolutely crucial to have Force Majeure language in all of your contracts, there is another element of Force Majeure that you should keep in mind: the notice requirement. While notice can be often overlooked, it is crucial to consider when drafting your Force Majeure clause. And, I’m here to help show you why it’s so important and what you should be thinking of when you issue your notice.
A Quick Recap On ‘Force Majeure’
A quick recap on what Force Majeure is. Black’s Law Dictionary defines “force majeure” as “an event or effect that can neither be anticipated or controlled, especially an unexpected event that prevents someone from doing or completing something that he or she had agreed or officially planned to do. The term includes both acts of nature (e.g., floods and hurricanes) and acts of people (e.g., riots, strikes, and wars).” As of spring 2020, Force Majeure clauses now often include epidemics and pandemics. A Force Majeure clause is a key component of any contract that you sign, and you should make sure they are included in all contracts you issue to your clients.
What Is Notice And Why Is It Important?
‘Notice’ in terms of Force Majeure means that the impacted party of the Force Majeure Event would notify the other party that they cannot perform their obligations under the contract because a Force Majeure Event made it impossible for them to do so. Issuing notice is a key component of a Force Majeure clause because it explains that the impact of a Force Majeure event cannot last forever. It will only allow a party to the contract to decry ‘Force Majeure’ for a certain period of time--usually within 5-10 days since the first day of the Force Majeure Event.
Notice often comes into play to protect yourself from any potential litigation. In a worst-case scenario, your client will not like the alternatives you propose to respond to the Force Majeure event, and will bring a suit against you. Providing Notice establishes a record that your clients contacted you (i.e. notified you) within the time period set forth in your Force Majeure clause AND that you contacted your client back in an adequate time frame and provided them with the opportunity to pursue reasonable alternatives. This can be crucial in the way a judge views your case if Force Majeure does become a contested issue under your contract.
Do You Also Have To Follow The Notice Requirement?
Simple answer--yes! Check the language in your Force Majeure clause and make sure that you are following the notice requirements that both you and your client signed off on. Usually it’s within 5-10 days from when the impacted party first knew about the Force Majeure Event. And then usually the parties have around 15-30 days to try and either cure performance or find an alternative solution. If there is no solution agreed upon, the contract would terminate.
Note here: you want to ensure that IF termination does occur because you and your clients cannot come to an agreement on how to resolve the non-performance due to a Force Majeure Event, you will want to have a sentence or two after in your clause explaining what happens to fees paid. The Legal Paige Template Force Majeure Clause includes this language and can be found HERE.
How To Accurately Provide Notice
When you provide your clients with notice in regards to Force Majeure, firstly make sure you are doing it in writing! That means via email!
Your written Notice should include an explanation of how the event you are referencing falls under Force Majeure and how that event is preventing you from being able to perform your duties as agreed to in the contract. Your Notice should also tell your clients what happens next; do they have rescheduling opportunities? Will there be any sort of refund issued? Your Notice should leave your clients feeling confident and comfortable with the fact that they know they have options and that you have thought about what happens next.
Do not be afraid to issue multiple Notices when it comes to a Force Majeure Event. For legal purposes, the more evidential proof you have that you issued Notice, the better. Not to mention, the unstable nature of a Force Majeure Event means that things are always changing. Make sure to keep the lines of communication open with your clients, and assure them that they are able to contact you about any concerns they may have. BUT, be clear that they have “x” amount of days to make their decision on how to proceed pursuant to the language in your Force Majeure clause.
Force Majeure clauses require a lot of consideration, and Notice requirements may seem like an afterthought. However, Notice is a critical component of a rock-solid Force Majeure clause, and can help ensure that you are covered should legal action follow.
If you still don’t have a Force Majeure clause in your contracts that delineate what a ‘Force Majeure Event’ is, what type of Notice is required, and what happens to fees paid if Force Majeure ultimately terminates the contract, I’ve created the perfect one for you HERE!
THIS BLOG POST IS NOT A SUBSTITUTE FOR LEGAL ADVICE. EVERY SITUATION IS DIFFERENT & IS FACT-SPECIFIC. A proper legal analysis is necessary based on your location and contract. Consult an attorney in your home state for advice regarding your contract or specific legal situation.