What constitutes an Act of God?

From Legal Post of Financial Post:

Most contracts will contain a “force majeure clause” that protects the parties if something happens that is beyond their control. In the event of a natural disaster or an “Act of God” the affected party can invoke the force majeure clause as a defence to any complaint about the non-performance.

The language found in force majeure clauses used to be straightforward and predictable. The clause would name a series of dramatic events — wars, legal changes, labour unrest, damage to production facilities, as well as the phrase “Act of God,” a catch-all term that covered all types of natural disasters: tornadoes, earthquakes, forest fires, land slides, locust infestations, wild animals, and so on. Basically, if it’s mentioned or suggested in the Old Testament, force majeure can get you out of it.

You also need to be on the lookout for situations where a force majeure clause stops serving as protection against uncontrollable circumstances, and instead becomes a list of ready-made excuses that might absolve a company of errors in management.

Read more at: http://business.financialpost.com/2012/03/19/what-constitutes-an-act-of-god/

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