How can "force majeure" clauses be beneficial in contracts?

"Force majeure" clauses serve a crucial role in contracts by excusing performance under unforeseen circumstances. This means that if an event occurs that is beyond the control of the parties involved—such as natural disasters, war, or pandemics—that makes it impossible or commercially impracticable for one or both parties to fulfill their contractual obligations, the force majeure clause allows them to be relieved from those duties. This protection is important because it recognizes that not all events can be anticipated or prevented, and it provides a legal framework for addressing those situations without penalty.

In scenarios where performance becomes impossible due to such unforeseen events, the inclusion of a force majeure clause can prevent parties from facing breach of contract claims. This fosters fairness and encourages parties to enter into contracts without fear of being held accountable for acts they cannot control. This aspect is particularly valuable in maintaining business relationships during crises and can also encourage the parties to negotiate alternate solutions or terms if needed.

The other options—such as creating opportunities for renegotiation, limiting liability, or ensuring penalties for non-performance—do not capture the primary function of force majeure clauses, which is to excuse parties from their obligations under specific, uncontrollable circumstances.