Jackson Moore and J.P. Vogel | Gray Reed
Unexpected devastating weather events such as hurricanes, tornados, earthquakes, fires and other natural disasters can strike at any time, leaving construction projects in disarray. While Mother Nature is often unpredictable, we can control how we prepare for and respond to such events through the careful drafting or understanding of force majeure provisions within your construction contract. Force majeure clauses are crucial for protecting your interests when disaster strikes.
Understanding Force Majeure
“Force majeure” is a phrase borrowed from the French language meaning “superior force.” Today, force majeure clauses excuse a party’s performance when confronted with unforeseeable and unavoidable events. In construction contracts, these provisions serve as a critical safety valve when extraordinary circumstances arise. Let’s examine a few sample force majeure provisions and the key elements that make these provisions work:
- Sample Clause 1 – “Neither party shall be liable for any delay or failure in performance due to causes beyond its reasonable control, including but not limited to acts of God, natural disasters (such as hurricanes, tornadoes, floods or earthquakes), acts of government, war, terrorism, labor disputes or supply shortages caused by such events. The affected party shall provide prompt written notice to the other party upon the occurrence of any such event.”
- Sample Clause 2 – “A force majeure event means any event beyond the reasonable control of the affected party, which prevents or materially hinders performance under this Contract, including but not limited to natural disasters, pandemics, embargoes or governmental restrictions. The affected party shall not be liable for Project delay due to a force majeure event if said party (i) promptly notifies the other party in writing; (ii) uses reasonable efforts to mitigate the effects of such event; and (iii) resumes performance as soon as practicable.”
Qualifying Events: Not every unfortunate event qualifies as force majeure. Natural disasters like hurricanes and tornados typically qualify because they’re both unforeseeable and unpreventable. A hurricane making landfall near your project site would likely qualify, but normal seasonal rainfall wouldn’t. Although not natural disasters, war or government actions like trade embargoes usually trigger force majeure clauses because they’re beyond any party’s control. However, economic challenges like market downturns or material price increases typically don’t qualify because courts consider these foreseeable business risks.
Foreseeability Standard: The legal standard of foreseeability is crucial. For example, while a tornado touching down at your job site is unforeseeable, the possibility of severe weather during hurricane season is foreseeable. This distinction matters because contractors working in hurricane-prone regions may be expected to plan for seasonal weather risks. The key is whether the specific event’s timing, severity or impact could reasonably have been anticipated and planned for.
Performance Impact: Force majeure events must actually prevent performance, not just make it more difficult or expensive. For instance, if a hurricane forces you to evacuate your job site for a week, that’s likely a qualifying event. However, if the hurricane merely causes some supply chain delays that could be addressed through alternative sourcing, you may have a harder time invoking force majeure protection.
Heightened Importance of Force Majeure Clauses in Texas
While many states face extreme weather risks, construction projects in Texas are uniquely vulnerable due to the state’s size, varied geography and increasingly volatile climate patterns.
Recent years have underscored this vulnerability. In 2021, Winter Storm Uri, known to Texans everywhere as “The Freeze”, brought the state’s power grid to a halt. Without power, job sites statewide faced extended delays causing billions in damages. Another example of extreme Texas weather is Hurricane Harvey, which made landfall in Houston in late August of 2017. Harvey battered Houston and the Gulf Coast, leading to catastrophic delays and forcing widespread project standstills. More recently, an outbreak of tornados in spring of 2024 left a trail of destruction across Western and Central Texas, again highlighting the unpredictability of Texas weather.
These incidents are reminders that Texas contractors must prepare for catastrophic weather events that can derail even the most carefully planned projects. Force majeure clauses can be essential tools for risk management and legal protection.
Tariffs
Although force majeure clauses usually deal with extreme weather events, they can also offer protection for economic events as well. This was no more evident than during the Covid pandemic which resulted in numerous issues including governmental intervention, supply chain interruptions, material price increases, labor shortages and more. During the Covid timeframe the terms “pandemic” and “Covid” were regularly inserted into force majeure clauses. Now tariffs have become the pressing issue creating problems such as those created by Covid. In reviewing and preparing current force majeure provisions be sure to insert the terms “tariffs,” “changes in law,” “economic regulation,” “governmental economic intervention” or “trade wars.”
Weathering the Storm: Key Takeaways
Force majeure clauses are vital risk management tools that can safeguard construction stakeholders from the unpredictable. As Texas and other regions continue to experience increasingly volatile weather and geopolitical disruptions, it’s more important than ever to draft force majeure provisions that are tailored to your project’s specific risks.
When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes – please call Advise & Consult, Inc. at 888.684.8305, or email experts@adviseandconsult.net.