Under a Terms of Business agreement, when is an insurer and intermediary deemed not to be in default for failure to perform an action?

The situation where an insurer and intermediary are deemed not to be in default for failure to perform an action is best captured by the scenario of force majeure. Force majeure refers to unforeseen events or circumstances beyond the control of the parties involved that make it impossible for one or both of them to fulfill their contractual obligations. Such situations typically include natural disasters, war, pandemics, or other extraordinary events that prevent the execution of normal business activities.

In the context of a Terms of Business agreement, if an insurer or intermediary cannot perform due to a force majeure event, they cannot be held accountable for the disruption, as these events are outside their control and could not have been reasonably anticipated or mitigated. This means they are not in breach of the agreement, and there may not be any penalties or legal consequences for the inability to act.

Other scenarios, such as fraud by an employee, a misunderstanding of the agreement that leads to a material breach, or a failure to make payments within agreed credit terms, do not absolve parties from default. These situations typically imply violations of the terms of the agreement or actions that could have been addressed through better compliance or understanding of obligations. Hence, they do not carry the same level of justification for non-performance as force majeure does.