Certified Texas Contract Manager Practice Exam

Which event would not be classified under Force Majeure?

1. Natural disasters

2. Supplier bankruptcy

3. Unexpected removal of personnel

4. Government intervention

The correct answer is: Supplier bankruptcy

Supplier bankruptcy would not be classified under Force Majeure because Force Majeure refers to unforeseen events that are beyond the control of the parties involved, such as natural disasters, acts of war, or government intervention, which prevent contractual obligations from being fulfilled. Bankruptcy is considered a foreseeable business risk that can occur due to a variety of reasons related to the management and financial health of a company; it is not an unpredictable external event. In this context, when companies enter into contracts, they are expected to conduct due diligence to ensure the viability of their suppliers. Therefore, while supplier bankruptcy can have serious implications for contract performance, it does not fit the definition of a Force Majeure event since it results from a decision made within the organization rather than an external, uncontrollable circumstance.