Can You Use Your Force Majeure Clause? Probably Not

With budgets tight and employees more nervous than ever about stepping on an airplane, some companies are eyeing the Force Majeure clauses that excuse them from their contractual obligations to a meeting facility in the event of unanticipated circumstances. War, after all, often is thought of as a Force Majeure event. It certainly has contributed to a decline in meeting attendance and the subsequently high attrition fees many organizations are finding on their bills. But war by itself probably is not enough to excuse you from your meeting contract, says Lisa Sommer Devlin, an attorney with the Phoenix-based firm of Kurtz Sommer Devlin who represents hotels regarding group- and convention-related matters.

To meet the legal requirements of Force Majeure two elements must be present, says Sommer Devlin. First, an event must occur, such as a hurricane, flood, death of a key person or war, that is unexpected and beyond the control of the parties. Second, the event must make performance of the contract impossible. So if there’s a hurricane in Miami on the day your meeting is scheduled to take place there and no one is able to show up, you and the hotel can be released from the obligations of the contract. If that same hurricane hits Miami but your meeting is in Chicago, the hurricane wouldn’t prevent attendees from traveling to Chicago nor prevent the hotel from hosting the event, so in that case the hurricane wouldn’t qualify as a Force Majeure event.

“A similar analysis applies to the war in Iraq,” says Sommer Devlin. “The war is certainly something about which all Americans are concerned, but for the most part hostilities in the Middle East have no direct affect on the ability of meetings to take place in the United States. In other words, the second legal element of Force Majeure has not been met – the war does not make meetings impossible.”

Still, the reality is that the war has made a lot of people nervous about traveling and many organizations are looking for ways to cancel or reduce their contractual obligations. While Force Majeure is not an option for the vast majority of meetings, if you’re nervous about meeting your obligations keep in mind that meeting facilities likely will want to maintain their customer relationships, says Sommer Devlin. “They may decide for business reasons to make concessions that they legally are not obligated to make. Your chances of receiving these business concessions might increase if you approach the situation as a business partner, rather than as a legal adversary.” Her recommendations: communicate as early as possible your concerns about potential damages; propose a future meeting in exchange for reduced attrition damages, or suggest that a portion of the damages be credited to a future event; and market your event more aggressively and creatively to continue trying to boost attendance. When you understand Force Majeure and acknowledge your contractual obligations rather than trying to avoid them, says Sommer Devlin, hotels will be more open to sharing the impact of these tough times.

For more information on planning meetings during times of war and crisis, visit Meeting Professionals International’s Website at www.mpiweb.org.