Force Majeure Isn’t a Free Pass: Why Courts Rarely Excuse Nonpayment

The phrase force majeure often shows up in contracts as a kind of safety valve. Parties assume that if something beyond their control happens—a pandemic, natural disaster, or government shutdown—they’re automatically excused from performance. But when it comes to paying rent or money owed, courts rarely agree.

What Is a Force Majeure Clause?

A force majeure clause is meant to excuse a party from obligations when extraordinary events make performance impossible. Examples include floods, fires, terrorism, or supply chain collapse. The intent is to recognize that some risks are too extreme to plan for.

The Critical Limitation: Payment Obligations

Courts consistently draw a line between performing a service and paying money. Even during COVID-19 shutdowns, courts across New York and New Jersey held that force majeure does not relieve tenants or businesses of the obligation to pay rent. Hardship, even severe hardship, is not the same as impossibility.

Why Courts Take This Position

• Predictability: Payment is seen as always possible, even if difficult.
• Risk Allocation: Contracts assume financial risk is on the party who owes the money.
• Market Stability: Excusing payments broadly could destabilize entire industries.

Drafting Matters

Some contracts attempt to carve out rent or payments from force majeure protections explicitly. Others remain silent. Either way, courts generally interpret silence against the party seeking relief. If payment obligations are not specifically excused, they remain due.

What Businesses Should Do

• Negotiate Clear Language: If you want relief from payment obligations in certain scenarios, it must be spelled out.
• Consider Insurance: Business interruption insurance may provide more realistic protection than force majeure.
• Plan for Restructuring: In crises, renegotiation with counterparties is often more effective than relying on the clause.

Bottom Line

Force majeure clauses look powerful, but they’re no free pass. Courts rarely allow businesses to escape payment obligations, even in extraordinary times. At JDE Law Firm, PLLC, I help businesses draft and enforce contracts with eyes wide open about what force majeure really means—and what it doesn’t.

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