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 adverse selection affect insurance premiums?

    Find out what causes adverse selection in the insurance market and why it drives up premiums for all policyholders.
  2. What is the pro rata condition of average on an insurance claim?

    Find out what an insurance policy means when it has a clause stating pro rata condition of average for damage claims when ...
  3. What types of assets and payments are recorded in the capital account?

    Read a brief overview of the definitions of the capital account, where it is used, and what types of assets and payments ...
  4. How can industrialization affect the national economy of less developed countries ...

    Read about how industrialization impacts economic growth in less developed countries (LDCs), using Hong Kong and Great Britain ...
RELATED TERMS
  1. COPE Insurance

    A set of risks that property insurance underwriters review when ...
  2. Automatic Premium Loan

    An insurance policy provision that allows the insurer to deduct ...
  3. Blanket Medical Expense

    An insurance policy which provides coverage for all medical expenses ...
  4. Cestui Que Vie

    The individual who is the beneficiary of a trust or insurance ...
  5. Aircraft Insurance

    Insurance that provides liability and property coverage of aircraft.
  6. Boat Owners' Insurance

    An insurance policy that provides coverage for individuals who ...

You May Also Like

Related Articles
  1. Economics

    Gambling on Macau: Too Risky?

  2. Economics

    Bulk Shipping Companies Struggle As ...

  3. Stock Analysis

    3 Things That Could Hold Intuitive Surgical ...

  4. Investing

    What Has Been Groupon’s Growth Strategy?

  5. Economics

    The Economic Impact of Better US-Cuba ...

Trading Center