Key terms in project finance documentation and drafting tips — force majeure clause

A force majeure event is an event that occurs that is beyond the control of the project parties. The event prevents a party, or multiple parties, from fulfilling their contractual obligations. It can materially and adversely affect the completion or operation of a project.

Force majeure risk is particularly acute for the project lenders as any delay or suspension to the generation of project revenues can have serious consequences for the ongoing viability of the project, and, in extreme circumstances, a lengthy delay caused by an event of force majeure may result in termination of the project and insolvency of the borrower.

This guidance note explores the identification and management of force majeure risks, and drafting considerations relevant to force majeure provisions in project documents.

See Key terms in project finance documentation and drafting tips — force majeure clause.