What is Foolsaurus?

It's a glossary of investing terms edited and maintained by our analysts, writers and YOU, our Foolish community. Get Started Now!


Force majeure

Companies declare force majeure when they want to get out of or renegotiate contracts because something really big, really bad, and really unavoidable has occured. Some oil companies are declaring force majeure in the wake of the Deepwater Horizon oil disaster, as a moratorium on Gulf of Mexico drilling may be enacted.

Contents

Expanded Definition

Most contracts contain a standard force majeure clause allowing an out if something like a terrorist attack or natural disaster makes it impossible for one party to fulfill the contract. One example often given is: If lightning strikes and burns down a house that one person had already contracted to buy from another, neither party is responsible for fulfilling their end of the contract.

Related Fool Articles

  • [LINK TITLE]

Related Terms

Recent Mentions on Fool.com

Advertisement