New publication on force majeure in business relationships
Force majeure clauses are meant to protect firms from unforeseeable disruptions – but what happens when they're misused to weasel out of obligations?
The multi-method study uncovers that force majeure declarations are not always based on genuine exogenous shocks. Some firms invoke them opportunistically to navigate or avoid underlying relationship issues or unfavorable contractual terms. However, this tactic can backfire, with its impact heavily dependent on timing, context, and the strength of the prior relationship.
The study's key insight is that not all force majeure declarations are created equal, as their effectiveness depends heavily on timing, context, and communication style, with early, transparent dialogue proving more effective than formal legal notices, especially in high-trust relationships.