Contracts & COVID-19: How to Quickly Find Force Majeure Clauses Using AI

April 21, 2020

3 minute read


“Force majeure” is a common clause in contracts that releases both parties from obligation or liability during unforeseeable circumstances, such as a pandemic, war, or natural disaster. As the world tilts on its axis amidst COVID-19 concerns, the unforeseeable is no longer a “what if”—it’s our common reality. This has left many questioning the validity of their agreements and what they’re on the hook for contractually.

The fact that organizations need quick and clear visibility into their force majeure exposures and opportunities is unfortunate but necessary. With the enforceability, liability, and obligation of their agreements in question, many are scrambling to quickly identify and act on force majeure clauses across their agreements. AI-based technology can help ease this burden.

Adapting to the fundamental business and societal shifts we’re facing means moving quickly and having the right information at your fingertips. And determining if your contracts contain COVID-19-specific language requires broad insight into whether they contain one or more of a wide range of terms, including “pandemic,” “epidemic,” and many others.

Read how AI can help you quickly conduct force majeure review across a broad set of contracts.

Step #1: Discover

Where are my contracts?

The first challenge is locating your contracts across various systems, repositories, and fileshares. If left to manual effort, you will incur time and cost penalties that could be easily avoided. Unfortunately, not every contract will have the necessary force majeure coverage for a pandemic like COVID-19. Getting the early stage right can help you focus and will allow your organization to execute the necessary remediation actions sooner.

Step #2: Prioritize

Which contracts do I need to focus on?

Whether you have a tightly controlled system to manage your contracts or not, knowing which ones to focus on is key to gaining the most value or avoiding the highest risk areas. Shifting supply chains and changing market conditions mean that you need the agility to find and focus on the most relevant contracts first. Leveraging an AI-based contract intelligence solution to find, classify, and tag respondent contracts can reduce the effort from weeks to hours.

Step #3: Analyze

Which contracts contain relevant force majeure clauses?

Once you’ve found your focus, you need the ability to dive deep into your contract content to search for key terms, dates, parties, and clauses quickly and efficiently. AI technology allows you to do this automatically and at scale, regardless of content format. This is critical, since contracts are inherently complex and don’t adhere to any common standard. Thankfully, it is now possible to leverage technology to quickly get into the internals of your contract content, regardless of source format, to find the key data you need to act.

Step #4: Act

How can I mitigate my risk during the pandemic and beyond?

Now you’re nearly at the finish line. You’ve been able to find the relevant needles in the proverbial haystack and can now execute on the strategic options you’ve been considering in response to COVID-19. Finding contracts that can be effectively cancelled or modified, shifting supply lines, or adjusting terms, adding amendments, or papering new contracts can now be performed by the experts in your organization—helping you get back to a place of strength for your customers, your team, and your community.

The Final Verdict

Despite the great challenges this pandemic has thrown at us, both personally and professionally, there is some solace to be found in the fact that technology can help organizations reduce their workloads and take back some control. The right technology combined with human expertise will be a key contributor to your organization’s recovery, resilience, and prosperity. Click here to learn how AI-based contract intelligence software can help you quickly understand and act on contractual obligations—helping you reap business-bolstering benefits long after we get back to “life as usual.”

Don’t forget to share this post