Corey Boock Discusses Impact of Natural Disaster Predictive Modeling on Force Majeure Clauses
Corey Boock was quoted in the Law360 story “Hurricanes Stir Questions On ‘Acts Of God’ In Contracts” (subscription required). In the wake of several natural disasters, the piece examines how force majeure language in construction and leasing contracts will impact rebuilding efforts. It further discusses how these events have brought renewed attention to the argument that the increased occurrences of hurricanes and flooding are no longer unforeseeable “acts of God.”
Law360 writes that force majeure is rooted in the idea of unpredictability, but as climate-related events become more common and modeling methods evolve and improve, force majeure contract language needs to be reconsidered, and new standards need to be put in place.
Commenting on the issue, Corey said, “A middle ground is tweaking the language to specify the climate risks and building codes of each geographic location.” He continued by saying Nossaman “often works on projects in California, and there’s going to be earthquake seismic requirements set to a standard. The force majeure clause may not generically say ‘earthquake,’ but it may say ‘earthquake over 5.0’ or ‘over the design requirements,’ so the anticipation is that you’re supposed to have designed this thing to withstand [the impact] and we expect you’re going to do that, so if it’s within those parameters, you don’t get the benefit of force majeure.”
In addition to what triggers force majeure, there are also considerations on what immediately follows, Corey added, including whether insurance policies may absorb some of the immediate costs, if relief time or money is warranted for construction projects, and whether the event causes such long-range impacts that a contract termination could be triggered. “There are lots of contract issues with lots of implications, and I think this is going to keep engineers, contractors and lawyers busy for some time working through all the implications,” he said.
He closed by saying what’s likely to come in the short term is an industry shift in negotiation and nuance at the contract-writing stage, likely refined by a wave of climate-related force majeure clause triggers. “I think as things get more complicated and the parties get more sophisticated, these provisions are not only getting triggered more frequently, but the negotiation on the front end and the interpretation once these things occur are really crucial.” He added, “You’ve really got to look at the words and to work the contract with technical requirements and piece it all together.”
