Smith Industries, a U.S. company, is involved in a long-term contract with a foreign counterparty. An investigation

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Smith Industries, a U.S. company, is involved in a long-term contract with a foreign counterparty. An investigation in the counterparty’s home country reveals that the counterparty may have engaged in systematic bribery of officials there. As yet, the investigation has not been concluded, and Smith Industries has not been able to verify whether or not the allegations are true. Smith Industries worries that it will face potential FCPA liability if it continues to perform its obligations under the contract. On the other hand, ceasing to perform its obligations will expose it to potential liability for breach of contract. Is there a way out of this dilemma? Would it matter if the contract contained a “force majeure” clause, under which either party can suspend performance after the occurrence of an extraordinary event or circumstance that prevents the party from performing?

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