Force Majeure Clause (Commercial Real Estate)

by Practical Law Real Estate

A Standard Clause for use in commercial real estate agreements to allocate risk for certain events beyond the parties' control. This Standard Clause defines a "Force Majeure Event" to include acts of God, natural disasters, epidemics, pandemics, government actions, and labor disturbances. It addresses the legal consequences when such an event occurs, establishing when a party's failure or delay in performance may be excused without resulting in a default or breach of contract. This Standard Clause also provides a framework for procedural requirements, including timely notice and a party's duty to mitigate the impact of the event. It can be tailored to be either unilateral or mutual and to address whether monetary payment obligations are excused. As state and local laws govern interpretation and courts typically construe these provisions narrowly, this model clause is a critical tool for managing unexpected disruptions in any commercial real estate transaction.