In the current environment, disruption and lack of predictability are the new norm. As we experienced in the COVID-19 pandemic, the force majeure clause is taking center stage at least for some companies. It is time to review your contracts to make sure you understand how these clauses apply.
Many understand the general concept of these clauses − a main tenet of most force majeure clauses is the impossibility of performance as a result of an unforeseen event that is out of the control of the party. In short, these clauses set out the situations where one party can be relieved of liability for non-performance during the pendency of this event that is out of the control of one of the parties. Typical examples are natural disasters, acts of war, or certain governmental actions.
However, how the clause is applied to your circumstances is often much more nuanced than the general concepts. Whether performance that is now more expensive or more challenging due to the current environment (e.g., tariffs or other events) amounts to a force majeure will depend on the governing law (domestic and international) applied, the force majeure clause terms and conditions themselves, and the totality of the particular circumstances. Navigating all of these issues in uncertain times is not something to be done at the last minute.