Force Majeure Clauses in Commercial Leases: Lessons from Recent Disruptions

Few contractual provisions shifted from boilerplate afterthought to critical focal point as dramatically as force majeure clauses did during recent global disruptions. These once-overlooked paragraphs suddenly determined the fate of millions in rental obligations and countless landlord-tenant relationships. As the commercial real estate industry absorbs these lessons, a new understanding of force majeure provisions has emerged—one that recognizes their central importance in risk allocation between landlords and tenants.

The Evolution of Force Majeure in Commercial Leasing

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Traditionally, force majeure (French for "superior force") clauses addressed truly extraordinary circumstances that prevented parties from fulfilling contractual obligations. These provisions typically covered natural disasters, war, civil unrest, and government actions that made performance impossible. Historically, they remained largely academic exercises rarely tested in practical application.

Recent global disruptions shattered this paradigm, forcing unprecedented examination of these clauses in courts nationwide. The resulting jurisprudence has fundamentally altered how these provisions are drafted, negotiated, and interpreted.

"Force majeure clauses have undergone more evolutionary change in recent years than in the previous century," explains Alexandra Rodriguez, commercial real estate attorney with the American Bar Association's Real Property Section. "What was once an afterthought in lease negotiations has become a central consideration with significant financial implications."

Crucial Lessons for Today's Market

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The hard-won experience of recent disruptions has yielded several critical insights that shape current best practices for both landlords and tenants.

Specificity Matters More Than Ever

Pre-pandemic force majeure clauses often relied on catch-all language referencing "acts of God" or "circumstances beyond reasonable control." Courts have repeatedly shown skepticism toward such generalized language, instead favoring provisions that explicitly enumerate covered events.

Modern force majeure clauses now typically include specific references to pandemics, epidemics, public health emergencies, and government-mandated closures or restrictions. This specificity removes ambiguity about whether these events trigger force majeure protections.

Nearly 87% of commercial leases executed since 2021 explicitly address pandemic scenarios in their force majeure provisions—a dramatic increase from less than 12% pre-2020.

The Differentiation Between Payment and Performance

Perhaps the most consequential legal distinction to emerge concerns the difference between payment obligations and performance obligations. Courts have generally maintained that economic hardship alone doesn't excuse rent payment, even during unprecedented disruptions.

Many force majeure provisions now explicitly state whether rent obligations are suspended during triggering events. Where tenants seek such protection, landlords typically demand narrower triggering conditions and shorter relief periods in exchange.

"The fundamental bargain in commercial leases remains that tenants bear the business risk while landlords bear the real estate risk," notes Richard Chen, commercial leasing specialist at CoreNet Global, an association for corporate real estate professionals. "Force majeure negotiations now explicitly address how and whether extraordinary events shift this risk allocation."

Government Action as a Distinct Trigger

Recent experience highlighted the critical distinction between the underlying disruptive event and government responses to that event. Many businesses weren't directly impacted by the pandemic itself but rather by subsequent shutdown orders, capacity restrictions, or operational mandates.

Modern force majeure provisions increasingly distinguish between these scenarios, specifically addressing government actions that restrict property access or use. These provisions often include notice requirements, documentation standards, and proportional relief mechanisms that activate only for the directly affected portion of the premises.

The Duty to Mitigate Remains

Even when force majeure clearly applies, courts consistently uphold the fundamental contract principle that all parties must make reasonable efforts to minimize damages. This duty to mitigate has significant practical implications for both landlords and tenants.

For tenants, this means demonstrating efforts to adapt operations, pursue alternative revenue streams, or implement cost-saving measures before seeking force majeure relief. For landlords, this might involve helping tenants access assistance programs, temporarily modifying spaces to accommodate new operational requirements, or finding creative solutions that keep tenants viable.

Strategic Approaches for Landlords and Tenants

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The heightened importance of force majeure provisions demands strategic approaches from both sides of the leasing relationship.

For Landlords: Protective Drafting Strategies

Savvy landlords now approach force majeure provisions with greater precision and protective measures:

• <b>Carving out essential obligations</b> – Explicitly excluding rent payments and other financial obligations from force majeure coverage
• <b>Incorporating time limitations</b> – Adding maximum durations for any relief periods, regardless of how long triggering conditions persist
• <b>Requiring prompt notification</b> – Implementing strict notice requirements that, if not followed, waive force majeure rights
• <b>Creating documentation standards</b> – Specifying what evidence tenants must provide to demonstrate that force majeure conditions directly impact their operations

For Tenants: Securing Meaningful Protections

Tenants now recognize the critical importance of negotiating force majeure provisions that provide actual protection during disruptions:

• Explicitly including rent abatement or deferral during periods when government actions prevent normal business operations
• Securing proportional relief when restrictions partially impact operations (such as capacity limitations)
• Addressing key related provisions like continuous operation requirements, co-tenancy clauses, and business interruption coordination
• Negotiating extension rights that add disruption periods to the lease term​​​

The Ripple Effects on Related Provisions

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Force majeure considerations now extend beyond the designated clause to influence numerous other lease provisions.

Business interruption insurance requirements have grown more detailed, often with specific coordination language addressing how insurance recoveries interact with any lease relief. Casualty provisions face similar scrutiny, with greater attention to scenarios that might fall between traditional property damage and force majeure events.

Even seemingly unrelated provisions like operating covenants (requirements to remain open during specified hours) now typically include express cross-references to force majeure qualifications, acknowledging that external events may make compliance impossible.

Conclusion: The New Reality of Risk Allocation

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The commercial leasing landscape has fundamentally shifted toward more explicit risk allocation for extraordinary events. Force majeure provisions have evolved from an afterthought to a critical negotiation point that can significantly impact both parties' financial outcomes during disruptions.

For landlords, this evolution means more carefully drafting provisions that protect core economic rights while providing reasonable accommodation for truly extraordinary circumstances. For tenants, it means recognizing that the default language rarely provides adequate protection and prioritizing these negotiations accordingly.

In this new era, the most successful parties approach force majeure not as a technical legal boilerplate but as a concrete business discussion about how risk should be allocated when unforeseen events occur. This framing transforms the negotiation from legal abstraction to practical risk management, ultimately producing clearer agreements better suited to withstand whatever disruptions the future may hold.

The lessons of recent years have been costly for many in commercial real estate. By applying these insights to current and future lease negotiations, industry participants can create more resilient agreements that more fairly allocate risk and provide greater certainty during uncertain times.