What is a "force majeure"?

By Katie Adams AAA
A:

A force majeure is derived from the French term meaning "greater force" and refers to any natural and unavoidable catastrophe. A force majeure clause is included in contracts to remove liability when such events restrict participants from fulfilling their obligations. When negotiating these clauses, make sure that they apply equally and benefit all parties bound to the agreement. It may also be helpful to include some specific examples of acts that will be covered under the clause such as wars, natural disasters, and other major events that are clearly outside a party's control. Examples will help to clarify that the clause is not intended to apply to excuse failures to perform for reasons within the control of the parties.



(For more on this read, Preparing for Nature's Worst)



This question was answered by Katie Adams.



RELATED FAQS

  1. How does marginal cost of production relate to economies of scale?

    See how marginal cost of production relates to economies of scale, and why every company should be concerned with reducing ...
  2. What is a longevity annuity?

    Understand all the characteristics of a longevity annuity contract, the purpose of a longevity annuity and what type of investor ...
  3. How do I determine the face value of a life insurance policy?

    Read about how to determined the face value for any life insurance policy, and see what circumstances can trigger a change ...
  4. How does a high discount rate affect the economy?

    Find out what would happen if the Federal Reserve decided to set a very high discount rate, the rate at which banks can borrow ...
RELATED TERMS
  1. Nordic Model

    The social welfare and economic systems adopted by Nordic countries.
  2. Credentialing Liability

    Liabilities that a hospital or medical facility faces for the ...
  3. Counseling Liability

    Liabilities from the provision of counseling services.
  4. Bare Walls Coverage

    A type of insurance coverage that applies to communally used ...
  5. Contents Rate

    The premium required to insure the contents of a property rather ...
  6. Borderline Risk (Insurance)

    An insurance policy applicant that an insurance company has not ...

You May Also Like

Related Articles
  1. Economics

    No Exit: What Could Happen If the Eurozone ...

  2. Insurance

    Finding The Best Health Insurance You ...

  3. Insurance

    Avoid The No-Health-Insurance Penalty ...

  4. Insurance

    Rating Assurant Prepaid Vs. Delta PPO ...

  5. Economics

    The Economic Impact of Better US-Cuba ...

Trading Center