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THE REVERSE FORCE MAJEURE

Overview

Jeff O’Hara, President AlliedPRA New Orleans

We all have provisions in our contracts that cover Force Majeure events, relieving the contracted parties of their obligations if the event can’t take place in the contracted location due to Acts of God, Civil Unrest, Transportation Disruption and several other standard reasons. However, what is not as common is a Force Majeure clause that kicks in when the Force Majeure event takes place in the location the client is coming from. While not common, it is not unprecedented for a client to request this clause to be added into our contracts. Where it becomes important for companies such as DMC’s or Incentive Travel Companies is that many of our services are contracted through additional suppliers. Since it is not standard in most contracts, it is critical that the language in your supplier contracts reflect the Force Majeure provisions that your client requires. Otherwise, you could be held to this clause and have no recourse with the suppliers you have contracted.

We recently had a perfect example of why this is so important. We were contracted with a company based in South Florida, and where a majority of the Incentive Program guests would be coming from the Gulf States. Their legal team required a Force Majeure clause that released them from the contract if an event happened that affected South Florida or the area where many of their guests were coming from. We duly required this clause be placed into all of our supplier contracts for this program, and it caused a lot of consternation as it was a new request to many of them.

As fate would have it, Category 5 Hurricane Irma was bearing down on South Florida 4 days before the program was to take place, and our client dutifully exercised their rights under this clause. Our client was still concerned about obligations and potential loss of deposits due to this. We were able to ally these fears by informing her that we were fully protected and she would have no liability. One less thing to worry about in the face of an evacuation. The days of the event were bright sunny days in New Orleans, and the events certainly could have taken place here. Had we not insisted on the clause in our supplier contracts, it could have been a major liability for us.

Fortunately, our client’s office and the majority of their guests were spared and they decided to re-book the Incentive Program a month later. With the extraordinary work of our Event Producers, we were able to re-create almost the exact program over their new dates. That work is a lesson for another article!

While this lesson is specific to Force Majeure, it certainly transfers to any additional clauses your clients may ask you to insert into a contract. Always, always ensure that your supplier contracts mirror these clauses.