Most buyers realize that sellers typically insist that the buyer's payment obligations be excluded from the force majeure clause. This is because while a force majeure event may affect the buyer's financial health, it typically does not (absent a catastrophic failure of the banking system) affect the buyer's mechanical ability to make payment. Therefore, if the parties agree to a mutual force majeure clause, typically the buyer’s obligation to pay for the goods is excluded. For more information, see Standard Document, Sale of Goods Agreement (Pro-Seller): Drafting Note: Force Majeure and Standard Document, Sale of Goods Agreement (Pro-Buyer): Drafting Note: Force Majeure.

Certain sale of goods agreements, for example, distribution agreements, may include a commitment by the buyer (as the reselling distributor) to adequately promote the downstream sale of the original seller's goods in the distributor's sales territory. The commitment may be reflected by the buyer's promise to resell the minimum specified quantities during the specified time period (or the buyer's promise to purchase minimum quantities from the seller).

The buyer's ability to honor this commitment may be affected by a force majeure event. If the event is covered by the force majeure clause, the buyer may be temporarily excused from performing its minimum resale or purchase commitments (for more information, see Standard Document, Distribution Agreement (Pro-Supplier): Drafting Note: Force Majeure).

The seller may, however, negotiate the right to terminate the distribution agreement if the buyer fails to perform its minimum resale commitments due to a force majeure event. For more information, see Standard Document, Distribution Agreement (Pro-Supplier): Section 19.01 Force Majeure.

If the contract includes a force majeure clause, the seller can argue that its delivery obligations are suspended during a covered force majeure event. Because the seller's inability to deliver may negatively impact the buyer's business, many buyers insist on having a termination right for an extended force majeure event even if the seller may have negotiated pro-seller delivery provisions that provide, for example, that stated delivery dates are estimates only.

For more information, see Standard Document, Distribution Agreement (Pro-Supplier): Section 19.01 Force Majeure.

A buyer that seeks a stable source of goods sometimes enters into a requirements contract. In a requirements contract:

Because of the exclusive relationship, the buyer may be particularly vulnerable to force majeure events that affect the seller's ability to supply the goods.

Therefore, the buyer in a requirements contract sometimes negotiates additional force majeure protections, such as:

For more information, see Standard Document, Requirements Contract (Sale of Goods): Drafting Note: Force Majeure and Standard Document, Manufacturing Supply Agreement (Pro-Buyer): Drafting Note: Seller's Requirement to Maintain Manufacturing Capacity and an Inventory Bank.

A take-or-pay provision in a sale of goods contract may also raise special force majeure considerations. A take-or-pay provision obligates the buyer in a sale of goods contract to either:

The provisions sometimes appear in:

The parties must consider whether the contract's force majeure clause provides the buyer relief from its take-or-pay commitment to pay for any shortfall of goods not purchased, especially if the force majeure clause generally excludes the obligation to pay money (payment obligations are not relieved by force majeure). For a sample take-or-pay clause to be inserted into a sale of goods agreement, see Standard Clause, Supply Agreement: Take-or-Pay Clause.

In many contracts, it is easy to determine whether a contract has a force majeure clause because the contract consists of one integrated document which incorporates all of the terms of the transaction, including a force majeure clause.

The issue is more complicated if the contract consists of multiple documents and either:

This can occur, for example, if sale of goods transaction is memorialized by both:

The parties to sales transactions memorialized by more than one document must consider which document governs if the documents include differing terms and conditions. The conflict between the terms and conditions of the standard forms or other documents exchanged between a buyer and a seller during sales contract negotiations is known as the battle of the forms.

For more information about the battle of the forms, including how Section 2-207 of the UCC generally governs battle of the forms issues, see Standard Document, Contract Basics: Battle of the Forms: Presentation Materials and Battle of the Forms Checklist.

For more information on how sale of goods contracts deal with battle of the forms issues, see Standard Document, General Terms and Conditions for the Sale of Goods (Pro-Seller): Drafting Note: Contract Formation and the Battle of the Forms and Standard Document, General Purchase Order Terms and Conditions (Pro-Buyer): Drafting Note: Contract Formation and the Battle of the Forms.

Routing guides may also present unique force majeure issues. Routing guides are used by customers in the supply chain, for example, retailers, to set out a uniform set of rules regarding shipping practices that vendors (such as manufacturers, distributors, and their transportation carriers) must follow when delivering goods. Routing guides help:

Routing guides typically set out:

Routing guides are typically set out on the customer's website. Best practices dictate that customers should ensure that:

For more information on routing guides, see:

For more information on integration clauses, see Standard Clause, General Contract Clauses: Entire Agreement.

Sometimes parties attempt to make a force majeure clause either incrementally broader or incrementally narrower in scope than the impracticability provisions of Section 2-615 of the UCC. This approach is risky because Section 2-615 does not include bright-line tests regarding:

The lack of bright-line tests means that drafting a force majeure clause around the commercial impracticability provisions of Section 2-615 of the UCC:

Service providers are generally prohibited from unilaterally changing their obligations. However, if the underlying transaction is large, long-term, or complex, the parties sometimes agree that specified excusable events can trigger a service provider's right to additional payment or a completion date extension. Customers typically require that any changes to the service provider's obligations be described under a mutually executed change order, which can raise force majeure issues.

A change order is a specific type of amendment to a services contract that the parties use to:

The list of excusable events is negotiable and may include events, such as customer-caused delays. If the list of excusable events also includes force majeure-type events, the parties must ensure that the change order provisions are drafted consistently with the contract's force majeure provisions.

For more information on change order clauses, see Standard Clause, Services Agreement: Change Order Clause (Excusable Events). For a sample form of change order, see Standard Document, Services Agreement: Change Order Form.

If the services being provided by the service provider include disaster recovery services, it may be appropriate to carve that risk out of the force majeure protection. For more information, see Standard Document, Professional Services Agreement: Drafting Note: Force Majeure.

Transportation services are particularly susceptible to force majeure risk. For example, sellers of goods frequently list lack of transportation services as a force majeure event because the availability of third-party transportation services can affect the seller's obligation to make timely deliveries. In turn, shippers (the sellers or buyers of goods contracting transportation companies like truck carriers for transportation services) must carefully consider how the transportation contracts that they enter into allocate force majeure risk, including the lack of availability of transportation services.

When negotiating transportation contract force majeure clauses, the shipper must consider:

For more information about bills of lading, see Standard Document, Bill of Lading Terms and Conditions: Drafting Note: Force Majeure and Practice Note, Bills of Lading. For more information about transportation agreements, see Standard Document, Transportation Agreement (Pro-Carrier): Drafting Note: Force Majeure.

While general force majeure drafting considerations apply to transition services agreements (see General Force Majeure Clause Drafting Considerations), there are other force majeure considerations. Specifically, sellers often request force majeure provisions that excuse them from performing transition services during a force majeure event. Buyers should be prepared to negotiate a reasonable list of events that excuse a seller's performance.

A transition services agreement is an agreement between the buyer and seller of a business for the seller to continue to temporarily provide specified shared services to the buyer. It allows the transaction to proceed without any delay caused by the buyer trying to secure those services on its own, whether from:

Some common examples of the services covered by transition services agreements include:

Transition services agreements are common in:

These transactions may leave the buyer temporarily lacking in certain essential services necessary to support the post-closing newly-acquired business, especially where:

The parties often solve this problem by entering into a transition services agreement.

Transition services agreements may include force majeure clauses that excuse the seller from providing the transition services during a force majeure event. For example, in an aggressively pro-buyer agreement, the buyer requires the seller to reimburse it if the buyer incurred costs to restore or obtain an alternative source for the services (if the seller cannot render the services due to force majeure). The seller typically rejects a provision that requires it to reimburse the buyer because the agreement already requires the seller to extend the service period by the amount of time the seller cannot perform due to force majeure.

For more information, see Standard Document, Transition Services Agreement: Drafting Note: Force Majeure.

The parties to an escrow agreement also must consider force majeure risk. An escrow is a legal arrangement in which an asset (such as cash, stock, or other property) is deposited into an escrow account under the trust of a third party (the escrow agent) until satisfaction of a contractual contingency or condition.

While general force majeure drafting considerations apply to force majeure clauses in escrow agreements (see General Force Majeure Clause Drafting Considerations), there are other force majeure considerations. For example, the escrow agent typically has most of the performance obligations under an escrow agreement. Therefore, the escrow agent may insist that the parties use its form of escrow agreement, especially if the escrow agent is a bank, financial institution, or other entity that regularly provides escrow services. The parties not acting as the escrow agent can expect the escrow agent's form to:

For more information, see Standard Document, Escrow Agreement: Drafting Note: Force Majeure.