What is a "force majeure" clause in a contract?

A "force majeure" clause plays a critical role in contracts by addressing situations where unforeseen circumstances prevent one or both parties from fulfilling their contractual obligations. This clause typically covers events that are beyond the control of the parties involved, such as natural disasters, war, terrorism, or other significant disruptions.

When a force majeure clause is invoked, it allows the affected party to be relieved from liability for non-performance without being considered in breach of the contract. This means that if a seller is unable to deliver goods due to a catastrophic event, they are not held accountable for failing to meet the terms of the agreement, as long as the situation meets the criteria outlined within the force majeure clause.

The effectiveness of a force majeure clause depends on the specific language articulated within the contract, including what events are covered and the obligations required by the parties in the event of a force majeure occurrence. By including this clause, parties can protect themselves against liability and foster a more manageable approach to unforeseen circumstances.

The other choices outline distinct aspects of contract law, such as payment terms, jurisdiction, and dispute resolution, each playing a different role in the structure and enforcement of a contract. However, they do not pertain to the concept of excuse from performance due to extraordinary events,