An Outsourcing Agreement governs the delegation of business functions to an external provider, defining scope, service levels, and performance standards. This playbook highlights key risk mitigation strategies for data protection, continuity, and liability allocation.
Why This Matters: Ambiguous force majeure clauses can lead to overbroad or insufficient relief, causing operational disruptions or unfair advantages, so clarity prevents misuse and mitigates risk.
Negotiation strategy
If you're the Company:
Ensure the clause includes a comprehensive list of events and clear notice requirements to avoid disputes. Negotiate for a reasonable duration of relief and a mechanism for resumption of performance.
If you're the Service Provider:
Advocate for a narrow definition of force majeure events to limit potential abuse. Ensure that the notice period is practical and that the clause includes provisions for prolonged impacts.
Essential elements
1
Force Majeure Definition
Defines uncontrollable events.
2
Notice Requirements
Specifies notification timeline.
3
Duration of Relief
Outlines suspension period.
Action framework
ACCEPT
Propose edits if the clause lacks clarity or omits key events.
EDIT
Reject if the clause is overly broad or lacks a resumption mechanism.
ADD
Add language for industry-specific risks or prolonged impacts.
PRO TIP
Always consult with industry experts to tailor the force majeure clause to specific operational risks.
Example clauses
FAVORABLE
Comprehensive Force Majeure Clause
"Force Majeure Event includes acts of God, war, terrorism, and other similar events beyond control."
NEUTRAL
Basic Force Majeure Clause
"Force Majeure Event means any event beyond reasonable control."
UNFAVORABLE
Vague Force Majeure Clause
"Force Majeure Event includes unforeseen events without further specification."
Fallbacks
High-Risk Projects
In high-risk projects, ensure the clause covers specific risks like political instability or natural disasters, which could severely impact performance.
Supply Chain Disruptions
For manufacturing contracts, include supply chain disruptions as a force majeure event to address potential delays in material availability.
Pandemic Response
In healthcare contracts, explicitly include pandemics to ensure clear relief measures during widespread health crises.
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