Knowledge To Negotiate

Knowledge To Negotiate

The French term Force Majeure meaning “superior push” is normally interpreted to indicate a fantastic event or group of circumstances that are beyond the control of the party, which is preventing the party from meeting their obligations under the agreement. A force majeure clause may excuse the party from performance or it could simply excuse performance during the term of the force majeure event.

For example here is a drive majeure clause. Neither party will maintain default or responsible for any delay or failure to comply with this Agreement credited to any action beyond the control of the affected party, excluding labor disputes, provided such party notifies the other. The issues that always get negotiated in negotiating a force majeure clause is what types of events fall into the definition of what constitutes a force majeure.

Clearly “acts of God” such as natural disasters such as flooding, hurricanes, tornados, earthquakes, typhoons, and conflagrations that prevent a party from performing would be a pressure majeure as those works beyond your control of the party. So would be things like accidental fires, or accidental building collapses. Wars, riots, or crimes are serving beyond the control of the parties as well.

Force majeure is not intended to excuse carelessness of the party or where implications are predictable. Circumstances that Suppliers typically want to add to this is of drive majeure are labor disputes such as attacks or lockouts and non-performance by their suppliers. With respect to strikes, those are a predictable event and Suppliers need to manage their business and their performance accordingly so when there is a strike they are able to perform.

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Lockouts aren’t only predictable, these are within the control of the Supplier, so why in the event you excuse a Supplier from performance for something that is within their control? The concept of a pressure majeure is to cope with something that is outside the parties’ control. Another concept Suppliers may choose to include is non-performance of their Suppliers. It may be reasonable to permit force majeure for non-performance of one of their suppliers if that supplier alone suffered a force majeure event.

For any reason apart from a real power majeure event it shouldn’t excuse the as what you truly are doing is allowing the Supplier to not take care of the Subcontract or their selection. The last thing to think about in writing or negotiating a pressure majeure clause is the impact of allowing the Supplier an excusable delay in carrying out.

A lot depends upon how long it could take for the Supplier to recover, and the kind of commitments made, and what investments or commitments you may want to make with other suppliers in the interim. For example, would you like to still be obligated to have to purchase a specific level of a product if the Supplier can recover in a single month? The response to that is probably.

What if it would take a 12 months to recover? Would you still want to be committed to purchase a specific volume from the Supplier if you’d to produce a significant commitment to some other Supplier in the interim to have them meet your demand? How about if you’d to make a significant investment to bring on the choice source? Or the cost impact of having two sources operating at lower quantities would drive your cost up? I’m a strong fan on including a period limit on power majeure where if there isn’t a recovery within a specific period, you have the right to terminate any firm commitments without responsibility.