Buzzwords for Markets Driven by Fear

Love has its own language and, in the markets, so does fear. As the global spread of the novel coronavirus triggered lockdowns and massive economic disruption, the terminology of bad news came back in vogue. Here are some useful phrases for parsing a catastrophe.

Force majeure, French for “superior force,” refers to clauses in many contracts that let a party off the hook in the event of an act of God—an unexpected, external event that makes it impossible for a party to fulfill its obligations. After much of the world’s economy temporarily shut down, companies began invoking force majeure to reject unneeded supplies or get out of leases. Such moves, though, often end up in court. Many U.S. states offer similar relief even for contracts without such a clause. —Bob Van Voris