What are the most important clauses to include in a force majeure provision for Import/Export Operations?

1 Definition and Scope

The first clause you need to include in your force majeure provision is a clear definition and scope of what constitutes a force majeure event. You should specify the types of events that qualify, such as acts of God, government actions, labor disputes, or public health emergencies. You should also indicate whether the events must be unforeseeable, unavoidable, and beyond the reasonable control of the parties. You should avoid using vague or broad terms that could lead to disputes or abuse. For example, instead of saying "any event that prevents or delays performance", you could say "any event that prevents or delays performance despite the exercise of due diligence and reasonable efforts to overcome it".

2 Notice and Evidence

The second clause you need to include in your force majeure provision is a notice and evidence requirement. You should state how and when the affected party must notify the other party of the occurrence and the expected duration of the force majeure event. You should also state what kind of evidence the affected party must provide to prove the existence and the impact of the force majeure event. For example, you could require a certificate from a competent authority, a declaration under oath, or a third-party verification. You should also specify the consequences of failing to comply with the notice and evidence requirement, such as losing the right to invoke the force majeure provision or being liable for damages.

3 Relief and Remedies

The third clause you need to include in your force majeure provision is a relief and remedies section. You should state what kind of relief the affected party can obtain from the force majeure event, such as suspension, extension, modification, or termination of performance. You should also state what kind of remedies the other party can seek in case of partial or total non-performance, such as compensation, specific performance, or termination of the contract. You should also address the allocation of risk and costs between the parties during and after the force majeure event, such as force majeure insurance, liquidated damages, or price adjustments.

4 Hardship and Change of Circumstances

The fourth clause you need to include in your force majeure provision is a hardship and change of circumstances clause. This clause allows the parties to renegotiate or adapt the contract in case of events that do not prevent or delay performance, but make it excessively burdensome or impracticable for one of the parties. For example, a sudden increase in tariffs, currency fluctuations, or market disruptions could affect the economic balance of the contract. You should state the criteria and the procedure for invoking the hardship and change of circumstances clause, such as the threshold of hardship, the duty to negotiate in good faith, and the role of a mediator or arbitrator.

5 Dispute Resolution and Governing Law

The fifth clause you need to include in your force majeure provision is a dispute resolution and governing law clause. This clause determines how and where the parties will resolve any disputes arising from the interpretation or application of the force majeure provision. You should state whether the parties will resort to litigation, arbitration, or mediation, and what are the rules and the venue for each option. You should also state what is the governing law of the contract and the force majeure provision, and whether it is the same or different. You should consider the implications of choosing a domestic or a foreign law, and how it may affect the enforceability and the validity of the force majeure provision.

6 Force Majeure Checklist

The sixth and final clause you need to include in your force majeure provision is a force majeure checklist. This clause serves as a quick reference and reminder for the parties to comply with their obligations and protect their rights. The checklist should include identifying and documenting the force majeure event and its effects on performance, notifying the other party as soon as possible with evidence of the event, seeking relief and remedies according to the contract terms, negotiating or adapting the contract in case of hardship or change of circumstances, and resolving any disputes through the agreed mechanism and applicable law.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?