A force majeure clause alters the parties’ obligations and/or liabilities under a contract if an unforeseen event means one or both can’t perform their contractual obligations.
Force majeure events are generally defined as acts, events, or circumstances beyond the reasonable control of the party concerned.
What is force majeure?
Force majeure events are usually defined as acts, events, natural disasters or circumstances beyond the reasonable control of the party concerned. If you want to rely on a force majeure clause, you must check the agreement to see if this clause exists.
There doesn’t have to be a specifically labelled force majeure clause as long as there are clauses that anticipate that there may be some sort of event beyond the control of the contracting parties that prevents one or both of the parties from performing their obligation. For example, if there is a severe fuel shortage, one party may not be able to deliver goods for a period.
Force majeure clauses can list the supervening events. Still, in most cases, they’re general in nature (for example, generally referring to acts of government, to performance having to be lawful, or to anything preventing performance beyond the party's control).
The Courts view force majeure clauses restrictively and can imply limitations.
How does a force majeure clause work?
A force majeure clause doesn’t have to be expressly labelled as such. What matters is that there is a clause or clauses that provide for what happens next should include an unforeseen event out of the control of the party seeking to rely on the clause occurs.
For example, in the UK, earthquakes are infrequent. Should a strong earthquake occur in your area, which affects your ability to perform the contract, you can rely on a force majeure clause to protect yourself against a civil claim for breach of contract.
However, this wouldn’t be the case in a country such as Japan or Turkey, where strong, disruptive earthquakes are common because earthquakes are not ‘unforeseen events’ in these regions.
Can a force majeure be claimed if the contract becomes non economical to perform?
Before claiming force majeure, you must establish whether the event makes performing your contractual obligations impossible or merely inconvenient. The latter won't stand up in Court.
To protect yourself against economic downturns, you should include in the contract specific clauses that deal with market fluctuations, credit availability and labour shortages.
Are force majeure clauses enforceable?
It’s important to note that force majeure isn’t a concept automatically recognised by English law in England and Wales Courts - the parties to the contract must have expressly agreed that it applies.
Typically, the Courts view force majeure clauses narrowly and can imply limitations on what you and the other party initially agreed to.
Are force majeure clauses implied?
Force majeure clauses can’t be implied in a commercial contract. To do so would weaken the principle that if you enter into a contract, you’re legally bound to fulfil your obligations under the contract.
What happens if there is no force majeure clause?
If you’re wondering if a force majeure clause is necessary, when there is no force majeure provisions in the contract, it could be possible to get some relief under the common law doctrine of frustration.
This is available in extreme conditions (frustrating events) that force a radical change in performance set out in the contract. The radical change “frustrates” or makes performance impracticable.
Can you claim force majeure without a clause?
It isn’t always commercially sensible to claim the frustration of a contract – for example, where the contract is for a very long term and contains provisions that are not rendered impossible by the temporary effects of the current outbreak.
An additional point to bear in mind is that when frustration is called incorrectly. Your opposing contracting party may claim an anticipatory or related to a reputation breach that could lead to the termination of the contract and exposure to a claim for damages, so careful consideration and advice are required before frustration should be alleged.
Get legal assistance from LawBite
Relying on a force majeure clause can be highly complex. A commercial law solicitor can assist you with drafting and interpreting such clauses, ensuring your best interests are always protected.
If you’re wondering what your contractual obligations are in a force majeure event, you can contact LawBite to discuss your questions with our expert lawyers.
Our team can provide legal gudiance and review your contract needs to protect your business. Book a free 15-minute consultation or call us on 020 3808 8314.
