What is an act of God (financial term)?

An "act of God" refers to an event beyond human control, such as natural disasters or pandemics. In contracts, the term is often used to refer to unforeseen circumstances for which no party can be held liable. It is often explicitly defined in insurance policies or contracts through a "force majeure" clause. Such a clause can prevent a party from being held liable for failure to perform obligations due to such a contingency.

Example: The corona pandemic meant that many contracts could not be fulfilled. In some cases, this can be seen as an "act of God," allowing parties to claim force majeure.

Version:
26/9/24