Source: Robin Roth, Senior Contracts Editor
E-Specs: June 7, 2006

The common thread running through almost all Force Majeure clauses is the standard of impossibility. It is the most restrictive standard for excuse of performance and, along with “illegal,” the pair set a high threshold reached only in the direst of circumstances. What does impossible mean and how can protection be broadened for your group? 

If the contract has no terms for excuse of performance for Force Majeure, Acts of God, Impossibility, etc., then basic contract law still provides an out but only for Acts of God and only if the intervening force prevents performance totally. Acts of God are primarily natural disasters like hurricanes and earthquakes, and holding the meeting would have to be truly impossible, say if the hotel was destroyed. Force Majeure events, on the other hand, are more under our control and hinder performance. These are emergency situations like strikes, acts of terrorism, war and curtailment of transportation and these events need to be spelled out more specifically in the contract. 

Protection will still be restricted; however, if illegal or impossible are the only standards used. A more liberal standard like “inadvisable” is recommended and used successfully to expand the clause but if there is resistance to this term, consider “commercially impracticable.” (Note the term is distinguished from “impractical.”) This phrase originated in the Uniform Commercial Code (see Restatement 2d of Contracts, § 261). It is defined in one of Conferon Global Services' standard convention center lease template agreements this way: “Commercial impracticability occurs when a party’s performance is made excessively burdensome, hazardous or unsafe by an extreme act or event occurring, the non-occurrence of which was a basic assumption on which the contract was made.”  Potential loss of revenue in and of itself does not qualify for excuse of performance.   

Commercial impracticability may be useful if the facility (convention center, for example) will not permit termination of the lease if one of the contracted hotels becomes unavailable. It is not the only element involved but if the Force Majeure clause contains other elements like the catchall phrase “for any cause beyond the reasonable control of the parties” along with a threshold percentage of attendees unable to attend (say 30%) and commercially impracticable to hold the event, the Force Majeure clause may apply more reliably than if “inadvisable” is used. 

Be sure to consult an attorney familiar with the meetings industry to best customize the Force Majeure clause to your group's needs. 

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