What Is Force Majeure?

By Scott Levine – Updated Apr 17, 2025 at 12:27 AM EST

Key Points

Force majeure clauses in contracts help companies avoid liabilities from unforeseen events.
COVID-19 led many firms to invoke force majeure due to disrupted operations.
Investors must consider force majeure impacts before reacting to stock changes.

A legal clause in contract law, "force majeure" absolves a party from liability when it fails to fulfill the terms of a contract. While companies hope for the best when entering into agreements, unforeseen circumstances can prevent companies from meeting the requirements of their agreements. In these cases, the companies may declare force majeure.

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Two people talking and reading paperwork at desk with legal books and gavel. — Image source: Getty Images.

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About the Author

Scott Levine is a contributing Motley Fool stock market analyst covering energy, industrials, technology, and materials. He is also a high school English teacher and a small business owner. He holds a bachelor’s degree in English and creative writing from Binghamton University, a master’s degree in secondary education from Adelphi University, and an advanced certificate in school building leadership from CUNY Queens College. A crossword puzzle enthusiast, he has solved more than 3,100 New York Times puzzles with a 97% solve rate.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.