In emergencies, a fire and flood clause can give you some relief. If the warehouse burned down, or you can't get to the office because the area has been evacuated- this is the clause for you.
What is a fire and flood clause?
It is a contract clause which states what happens if there is a fire, flood or other emergency.
Why is it helpful?
It can let you off your contract obligations during the time of an emergency and recovery. In some circumstances, it can let you off the hook forever.
Where in the contract is it?
They are usually towards the end of the contract under the title 'force majeure'. It is common in B2B contracts. If your contract does not have one, then the common law rules of 'frustration of contract' applies.
How do they work?
There are three key elements:
- Check that your emergency type is covered.
- Notify- usually the contract requires you to notify the other side that you are in an emergency as soon as possible. The contract might specify that you need to let them know what's happened and how much time it will take to get back on your feet.
- Minimise- Take steps to reduce the loss and get back on track as soon as possible.
Contracts may vary so it is important to get tailored legal advice.
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The Legal Enablers Team
Disclaimer: Articles from Legal Enablers are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought on the specifics of your situation.