Force Majeure Explained
Force majeure is Latin for “superior force” or “acts of god”. In our industry, it refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations.
In hotel contracts, the force majeure clause is a critical one because it can allow a group to completely cancel a meeting contract when an extraordinary event arises and rely on the clause to totally escape the typically huge contract cancellation penalties. When planning international events, be aware that force majeure in not normally a part of standard international hotel contracts; to protect yourself, make sure it is included.
What are Superior Forces?
When drafting and reviewing the force majeure clause, it is important to be specific regarding dates, dollars and percentages. Those signing the contract may not be the same people responsible for executing the meeting, so a good foundation for resolution is imperative (in case of an act of god). Similar to cancellation clauses, specific damages for force majeure consideration include the value of all sleeping rooms that were reserved and a portion of all food and beverage.
It is important for each party to understand their responsibility if the event can’t take place due to something out of everyone’s control. Make sure the clause includes severe weather affecting travel, natural disasters, government regulations, civil disorders, terrorism, epidemics, disease, strikes, suddenly-occurring travel restrictions, incapacitated travel facilities, or any other occurrence or emergency beyond either party’s control.
The meetings industry has faced many challenges to attendee travel in the past 20 years including terrorism attacks, hurricanes, earthquakes, floods, health epidemics, volcanic ash, strikes and labor disputes, and power outages, just to name a few. We don’t want these things to happen, but we also don’t want to be unprepared in case they do!
Consider Partial Force Majeure
Keep in mind that force majeure clauses are not for event cancellations only. If written effectively, a “partial force majeure” clause could help with attrition not met due to unforeseen circumstances that did not result in complete event cancellation. When including this in the contract, meeting planners should consider a clause that excuses either party’s responsibility “in whole or in part” in the event of a force majeure occurrence.
Most contracts allow cancellation if performance of the event would be illegal or impossible. But, that may not be enough. For example, storm damage could close an airport, making it difficult to impossible for attendees to get to the meeting. But if the venue is functional, the event could go on—it just would not have attendees, presenters or exhibitors. Adding the phrase “or commercially impracticable” solves the problem.
The force majeure clause, when drafted properly, would be implemented if there is an unexpected occurrence making it impossible, illegal, or commercially impractical for either party to perform its obligations under the agreement in whole or in part.