What is Force Majeure?
A contract clause that releases parties from obligations when extraordinary, unforeseeable events, such as natural disasters, pandemics, or wars, make.
Description
Force majeure (French for 'superior force') is a contractual provision that excuses one or both parties from performing their obligations when extraordinary events beyond their control prevent fulfillment. In real estate, it commonly applies to construction delays, lease obligations, and deliparticularly timelines.
Most off-plan SPAs in Dubai include force majeure clauses allowing developers to extend completion dates due to events like natural disasters, government actions, pandemics, or supply chain transformations. During COVID-19, many developers invoked force majeure to justify construction delays of 6 to 12 months. RERA evaluated these claims on a case-by-case basis.
Force majeure does not excuse general financial difficulty, poor project management, or foreseeable market changes. The event must be genuinely unforeseeable and make performance impossible, not merely more expensive or inconvenient. UAE courts interpret force majeure narrowly.
How to interpret
Force majeure clauses protect against genuinely unforeseeable catastrophic events, not ordinary business risks. A developer who fails to complete due to poor planning, cash flow problems, or rising construction costs cannot invoke force majeure. The event must be external, unforeseeable, and make performance objectively impossible, not merely more difficult or expensive.
When reviewing any off-plan SPA, pay close attention to the force majeure definition. Broad definitions that include vague categories like "government action" or "economic circumstances" give developers excessive latitude to delay without penalty. Negotiate for narrow, specific definitions and caps on the delay period that force majeure can justify.
Dubai market context
Post-COVID, force majeure clauses in Dubai SPAs have become more detailed, specifying qualifying events more precisely and capping the maximum delay extension. Investors reviewing off-plan contracts should scrutinize the force majeure provisions, as overly broad clauses give developers excessive flexibility to delay completion without compensation.
Frequently asked questions
A contract clause that releases parties from obligations when extraordinary, unforeseeable events, such as natural disasters, pandemics, or wars, make performance impossible or impractical.
Force majeure (French for 'superior force') is a contractual provision that excuses one or both parties from performing their obligations when extraordinary events beyond their control prevent fulfillment. In real estate, it commonly applies to construction delays, lease obligations, and deliparticularly timelines.
Force majeure clauses protect against genuinely unforeseeable catastrophic events, not ordinary business risks. A developer who fails to complete due to poor planning, cash flow problems, or rising construction costs cannot invoke force majeure.
Post-COVID, force majeure clauses in Dubai SPAs have become more detailed, specifying qualifying events more precisely and capping the maximum delay extension. Investors reviewing off-plan contracts should scrutinize the force majeure provisions, as overly broad clauses give developers excessive flexibility to delay completion without compensation.
Oliva feeds Force Majeure into a proprietary 6-dimension score that rates eparticularly Dubai project on Financial Value, Market Dynamics, Location, Developer Trust, Risk, Macro Context, and Liquidity. This keeps comparisons consistent across hundreds of listings.
The event must be genuinely unforeseeable and make performance impossible, not merely more expensive or inconvenient. UAE courts interpret force majeure narrowly.
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This content is for educational purposes only and does not constitute investment, financial, legal, or tax advice. Yields, returns, and market data referenced are historical or estimated and are not guaranteed. Capital is at risk. Seek independent professional advice before making investment decisions. Oliva is a licensed Dubai real estate advisor (DLD Broker Card: 92025, RERA BRN: 1573501). Read our Key Risks Disclosure and Disclaimer.