Source: Robin Roth, Senior Contracts Editor, Conferon, Inc.
E-Specs: November 18, 2002

Talk of war has moved the long-ignored Force Majeure clause higher on the list of meeting planners’ contract concerns. As attorney Barbara Dunn says, the Force Majeure provisions that were once the "forgotten child" have now become the "prodigal child." Planners want to discuss them first above other contract provisions. The following is a recap of an interview with Barbara.*

The typical Force Majeure clause contains a "grocery list" of all possible occurrences covered, and acts of God, war, disaster, and their variations are typically included. While there was much discussion of whether the events of September 11, 2001 constituted an "act of war" as outlined on many "grocery lists," that was often a non-issue because most Force Majeure provisions contained a "catch all" provision at the end of the list such as the following: "or any other emergency beyond the control of either party." This covers "groceries" left out.

However, according to Barbara, the most critical language in the entire clause language is the standard by which contract performance needs to be affected. Too often, the standard is set at a Force Majeure event rendering performance "impossible." That term really means that there is no possibility of performance – not simply that performance is made more difficult, costly or potentially hazardous. That’s why Barbara recommends lowering the standard by which performance needs to be affected to something less than "impossible." She often uses the phrase "inadvisable, illegal, or impossible." This captures situations similar to those seen following the events of September 11 in which performance of a contract was not "impossible" but was certainly "inadvisable" or "materially affected" by such events.

The higher the standard, the harder it is to meet. As outlined above, "illegal or impossible" are the highest standards, and if your clause includes only these it will be very difficult to be successfully excused from performance, at least under current state law. When rulings are handed down in 9/11-related cases, the standard of impossibility may be lowered towards "inadvisable" or "commercially unreasonable," which are the standards most hotels employed last year. These cases are now being litigated, but the courts have yet to reach decisions.

"Inadvisable" is easier to meet than "illegal or impossible" but hotels often resist "inadvisable." If this happens, Barbara advises splitting it out to say that you can cancel without liability if performance is "impossible or illegal" but you can state that the group can partially perform a contract (i.e., hold the meeting but with less attendees) without liability (i.e., not pay room and food and beverage attrition fees or function space rental) if performance is "inadvisable." The latter would include the hotel honoring any lower, "fire sale" rates.

*Barbara Dunn, Esq., is Attorney and Partner at Howe & Hutton, Ltd. She can be contacted at 636/256-3351 or bfd@howehutton.com

(Note: This information is not intended to be "legal advice." A qualified attorney should be consulted to review all contract issues.)