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, this term is often used to refer to unforeseen circumstances for which no party can be held liable. This is often explicitly recorded in insurance terms and conditions or contracts via a 'force majeure' clause. Such a clause can prevent a party from being held liable for the non-fulfilment of obligations as a result of such an unforeseen event.

Example: The coronavirus pandemic caused many contracts not to be fulfilled. In some cases, this can be seen as an 'act of God', allowing parties to claim force majeure.