I am so sure most readers have heard these words Force majeure being used by oil companies over and over when trouble looms, but seem not to understand what exactly it means in its real sense. Well for the benefit of those who fall in this category, I will tell you what it means.
Force majeure translates literally from French as superior force. In English, the term is often used in line with its literal French meaning, but it has other uses as well, including one that has roots in a principle of French law.
What Force Majeure Means In Business
In business circles, “force majeure” describes those uncontrollable events (such as war, labor stoppages, or extreme weather) that are not the fault of any party and that make it difficult or impossible to carry out normal business.
A company may insert a force majeure clause into a contract to absolve itself from liability in the event it cannot fulfill the terms of a contract (or if attempting to do so will result in loss or damage of goods) for reasons beyond its control.
Use force majeure in a sentence
- The force majeure was of vital importance to the businessman as no one is able to predict the future with reasonable certainty.
- When you are getting involved in a new contract you must make sure you agree with any force majeure before signing.
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The contract had a force majeure in it, to ensure that the construction workers did not have to fulfill their duties for things beyond their control.
Consequences of Force Majeure Event
- Neither the Authority nor the Operator shall be considered in breach of this Contract to the extent that performance of their respective obligations (excluding payment obligations) is prevented by an Event of Force Majeure that arises after the Effective Date.
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The Party (the “Affected Party”) prevented from carrying out its obligations hereunder shall give notice to the other Party of an Event of Force Majeure upon it being foreseen by, or becoming known to, the Affected Party.
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If and to the extent that the Operator is prevented from executing the Services by the Event of Force Majeure, while the Operator is so prevented the Operator shall be relieved of its obligations to provide the Services but shall endeavour to continue to perform its obligations under the Contract so far as reasonably practicable [and in accordance with Good Operating Practices], [PROVIDED that if and to the extent that the Operator incurs additional Cost in so doing, the Operator shall be entitled to the amount of such Cost [COST BEING DEFINED AS HAVING NO PROFIT COMPONENT] (the Operator having taken reasonable steps to mitigate the Cost)].
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If and to the extent that the Operator suffers a delay during the Construction Period as a result of the Event of Force Majeure then it shall be entitled to an extension for the Time for Completion in accordance with Sub-Clause
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If an Event of Force Majeure results in a loss or damage to the Facility, then Operator shall rectify such loss or damage to the extent required by the Authority, PROVIDED that any Cost of rectification (less any insurance proceeds received by the Operator for the loss or damage) is borne by the Authority (the Operator having taken reasonable steps to mitigate the Cost).
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The Operator shall be entitled to payment of the Base Monthly Charge during the period of interruption caused by the Event of Force Majeure.
Exxon Mobil on Friday, declared a force majeure on Nigeria’s Qua Iboe crude oil grade, and that a portion of production had been curtailed. Shell Petroleum Development Company of Nigeria Ltd had earlier declared same weeks before.
