In which scenario is a force majeure clause useful?

A force majeure clause is particularly useful in scenarios where unforeseen events prevent a party from fulfilling their contractual obligations, such as natural disasters. This clause is designed to protect parties when extraordinary circumstances—beyond their control—occur, thereby releasing them from liability for non-performance.

In the case of natural disasters, such as hurricanes or earthquakes, the performance of contractual duties may become impossible or impracticable. The force majeure clause provides legal protection by acknowledging that these uncontrollable events can disrupt normal business operations and interfere with the ability to meet contract terms. Thus, it allows for adjustments or temporary suspension of obligations without penalty, making it a critical aspect of risk management in contracts, especially in areas prone to such events.