Protecting Against the Possibility of Catastrophic Events: Careful Consideration of Force Majeure Clauses in Commercial Leases
May 30, 2006
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, however, 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 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. At the same time, owners of commercial real estate that have suffered through the recent catastrophic and tragic events such as the terrorist attacks of 9/11 and hurricanes Katrina and Rita unquestionably have learned all too well that the force majeure clauses of their leases may be the only means of ensuring invaluable protections if or when a catastrophic event does occur.