What is "Force Majeure" in contract terms?

"Force Majeure" refers to a contract clause that releases parties from liability or obligation when an unforeseen event occurs that makes it impossible to fulfill the terms of the contract. This can include natural disasters like hurricanes, floods, or earthquakes, as well as other significant events such as wars, strikes, or pandemics. The essence of this clause is to protect parties from being held liable for breaches of contract due to circumstances beyond their control, thereby allowing for suspension or termination of contractual obligations in such scenarios.

In the context of the other options, they do not accurately represent the concept of Force Majeure. Financial incentives are not the focus of Force Majeure clauses, nor is the clause related to project insurance requirements or ethical guidelines for contractors. Those elements serve different purposes in contract management and compliance, making the understanding of Force Majeure critical for recognizing how contracts can be affected by extraordinary events.