What does a "force majeure" clause do in a contract?

A "force majeure" clause in a contract addresses events that are beyond the control of the parties and may prevent one or both parties from fulfilling their contractual obligations. The primary function of this clause is to relieve the parties from liability or obligation when unforeseen circumstances, such as natural disasters, war, or other major disruptions, occur. This allows the affected party to avoid penalties or consequences that would typically arise from non-performance due to these uncontrollable events.

By including a force majeure clause, parties can protect themselves from the financial and legal repercussions of being unable to comply with the terms of the contract when faced with significant disruptions. It essentially acts as a risk management tool, acknowledging that certain situations can arise that render performance impractical or impossible.

In contrast, the other options focus on aspects of contract performance and compliance that are not the functional intent of a force majeure clause. For example, renegotiating terms or ensuring timely performance is not the purpose of such a clause, as it is meant specifically to address situations where obligations cannot be met due to factors outside a party’s control.