GREAT COMEDIANS have something that mediocre ones don't: good timing. And, when it comes to exercising your rights under force majeure clauses, the same applies: Timing is (almost) everything. It may mean the difference between a smooth exit from a contract and the right to terminate at all.

What Is It?

A force majeure provision addresses the conditions under which a party may terminate an agreement without liability in case of major unforeseen events. One that's well-crafted includes language to protect the group and the facility, including language that substantially modifies or entirely eliminates attrition damages if the parties decide to continue with the meeting despite a force majeure event. Force majeure events typically include war, terrorism, and labor strikes, but clauses in a provision may allow termination when the event is affected by “a cause beyond the control of the parties making it inadvisable, illegal, or commercially impractical to hold a successful meeting or provide the facility.”

The most critical timing issue is determining what interval between a potential force majeure occurrence and the scheduled meeting justifies termination of a contract. Several factors besides the actual dates on the calendar go into that determination: the size and type of meeting, the type of attendees and their travel plans, the proximity of the meeting to the force majeure occurrence, and the location of the meeting. Evaluating those factors helps to determine the window of opportunity to terminate a contract based on force majeure.

It Depends

There is no definitive answer as to when an event can serve as the grounds for terminating a contract. It would not be reasonable, for example, to use the outbreak of war in 2003 as a reason to cancel a meeting in 2006. But it would be reasonable to terminate an annual conference with international attendees scheduled to begin days after the start of the war. As another example, a terrorist attack in a smaller city far from the meeting destination may not be as strong a basis for force majeure termination as an attack in a major city located near a scheduled meeting.

The lead time needed to terminate a meeting is not unlike the lead time needed to plan a meeting: a seven-day, 1,000-person event has a different timeframe for termination than a two-day, 20-person meeting. The more lead time that is necessary to plan a meeting, the more reasonable it may be to cancel for reasons of force majeure that occur well in advance of that meeting. The answer depends on all the factors, including the type of force majeure clause and the type of force majeure event.

If you have determined that you are reasonably within the window of opportunity for termination, then take advantage of all possible reasons for termination. For example, once the World Health Organization recommended a ban on all but essential travel to locations where SARS cases were widespread, termination under a force majeure provision of an event in such an area was an easy out. Once the travel ban was lifted, it became more difficult to terminate, although that certainly did not preclude termination. Again, it depends on the convergence of a number of factors surrounding a particular meeting.

After an agreement is terminated, the parties' obligations to one another are over. This is true even if the reason that led to the force majeure termination no longer exists. That is, if the reason disappears — a war ends, an airline strike resolves, a health warning lifts — neither the group nor the hotel are under any obligation to “undo” the termination.




Jed R. Mandel is a partner in the Chicago-based law firm of Neal, Gerber & Eisenberg, where he heads the trade and professional association practice.