A force majeure clause to trump them all

23 September 2009

Force majeure clauses are “rarely understood, frequently unread and liable to abuse, misinterpretation and ambiguity”, which often gives suppliers the chance to stretch them to their limit.

And according to this article in the New York Times at the back end of last year, distinctly coiffured property mogul Donald Trump was keen to invoke the clause, allegedly aiming to delay payment of a $40 million loan he owes to Deutsche Bank as part of a property development.

There was a force majeure clause in the agreement between the two parties, which among the traditional risks such as fire and flood, included a clause covering “any other event or circumstance not within the reasonable control of the borrower”.

“Would you consider the biggest depression we have had in this country since 1929 to be such an event? A depression is not within the control of the borrower,” Trump told the NY Times.

However, when the boot is on the other foot Trump doesn’t appear to be so keen on the use of such a clause. When asked if he would let people change their deal to buy his property because of the recession, he replied: “They don’t have a force majeure clause.”

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