Many of us are quietly watching and waiting to see how newly imposed tariffs will affect the U.S. and global economy in the coming weeks, months, and potentially – years.[i] Anticipating these changes and protecting your transactions is going to be crucial, but what about deals that have already been negotiated and signed? Which party will bear the greater risks and burdens of tariff-related cost increases? There are several theories that may provide relief.
A widely used contract provision that will bear considerable scrutiny is the ‘Force Majeure Clause,’ which allows a party to avoid liability if it cannot fulfill its obligations due to circumstances beyond their control or unforeseen events.[ii] The motivator behind this provision is to protect parties against defined disasters, calamities, and acts (and wraths) of God.[iii] Numerous courts have considered such clauses, and many have declined to invoke the force majeure clause.
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