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Clarifying the Force Majeure Clause in a Commercial Lease
[Editor's Note: A&FP articles in March and April discussed how various 'boilerplate' clauses in a commercial lease may one-sidedly favor the landlord or tenant. The present article emphasizes the need to ensure that the force majeure clause in particular protects vital interests in the event of a major catastrophe. Whether your firm is a tenant or landlord, you'll want to take a close look, first at this article and then at your lease.]
When commercial landlords and tenants negotiate commercial lease agreements, the normal focus of their efforts is the essential conditions of the tenancy ' rent amount, lease term, option periods, and the like. Often overlooked, how-ever, are those provisions generally considered 'standard boilerplate.' Force majeure clauses, in particular, are frequently viewed as miscellaneous paragraphs not worthy of lengthy consideration or discussion.
Unfortunately, the pitfalls of a failure to carefully negotiate the force majeure provision of a commercial lease are often realized only when a true catastrophic event occurs. In such situations, the tenant may be least able to withstand any additional hardship and needs the protection that a well-drafted force majeure provision can afford. Commercial real estate owners who suffered through the terrorist attacks of 9/11 and hurricanes Katrina and Rita learned all too well that the force majeure clauses of their leases may be the only means of ensuring invaluable protections if a catastrophic event does occur. (See, 'Post 9/11 Insurance Lessons Learned from the Ensuing Case Law,' Commercial Leasing Law & Strategy, May 2006).
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