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When you enter into a commercial contract, you usually intend to see the contract through its term. However, there may be unforeseeable circumstances that prevent you from fulfilling your contractual obligations. In such situations, you may be able to rely on a force majeure clause to terminate or amend your contract. This article will outline:

  • what a force majeure clause is;
  • the steps you have to take to rely on the provision; and
  • the consequences of relying on such a clause.

What is a Force Majeure Clause?

A force majeure event, a ‘superior force’ or an ‘act of God’ refers to an event that occurs that is unanticipated and out of the control of contracting parties. This event makes it impossible for one or both of the contracting parties to fulfil their contractual obligations. In anticipation of the potential occurrence of a disruptive event, contracting parties will include a force majeure clause in their commercial contract. These clauses fall under the doctrine of frustration. This provision will:

  • detail a list of events that come under the definition of a force majeure event;
  • outline the process that a party must follow to rely on the clause; and
  • describe how the clause can assist the party impacted by the event.

By including such a clause in your contract, you ensure that you are not in breach of your contract if, due to an unforeseeable and faultless event, you are unable to perform your contractual obligations.

A force majeure event has to be a faultless event or an event that is not caused by an act or omission of a contracting party. Your provision will likely cover the following circumstances:

  • an earthquake;
  • a volcanic eruption; 
  • severe flooding; or
  • a pandemic, such as the COVID-19 pandemic. 

Most clauses will include a catch-all phrase, such as “and any other events beyond the party’s control”, to ensure that the occurrence of any other faultless events engages the provision. 

Steps to Rely on a Force Majeure Clause

To rely on a force majeure provision, you will have to first ensure that your commercial contract contains such a clause. If your contract expressly states that the contract remains alive despite an intervening or force majeure event, you will not be able to rely on a force majeure argument.

You, as the affected party, will generally have to prove the following elements to a court to rely on the provision:

  • that the occurrence of the event was beyond your control;
  • that the event has prevented you from fulfilling your contractual obligations. This element has quite a high threshold. You will have to demonstrate that it is physically or legally impossible for you to fulfil your contractual obligations. This inability to perform the contract must be clearly linked to the occurrence and effects of the event; and
  • you have made all reasonable endeavours to rectify the event and counteract any damage the event has caused. It is not sufficient to engage the force majeure clause as soon as the event has occurred. 

However, your clause may detail different or additional elements that you must demonstrate to rely on the clause. It is essential that you examine the clause in your commercial contract before you engage in a case to rely on the provision.

The Consequences of a Force Majeure Clause

Your clause will outline what relief the provision can provide. If you successfully demonstrate the elements outlined in the provision, you will likely be able to:

  • terminate your commercial contract. Once your contract is terminated, you are no longer required to fulfil any of the obligations contained in the contractual provisions;
  • suspend the performance of your obligations under the contract until the time that the event is no longer an interference; or
  • be pardoned from any consequences that may flow from the non-performance of your contractual obligations. 

Your clause may also allow you to recover:

  • expenses paid in the performance of or the attempt to perform your contractual obligations; or
  • compensation for any actions committed under the contract that conferred a non-monetary benefit to your contracting party. 

Key Takeaways

Although you enter into a commercial contract intending to fulfil all of your contractual obligations, there may be circumstances that prevent you from doing so. These situations are known as force majeure events, such as earthquakes or pandemics. To anticipate the occurrence of these events, it is best practice to include a force majeure clause in your commercial contracts. To rely on this clause, you will usually have to demonstrate that:

  • the occurrence of the event was beyond your control;
  • the event has prevented you from fulfilling your contractual obligations; and
  • you have made all reasonable efforts to rectify the event and counteract any damage caused. 

If you need assistance in relying on a force majeure clause, contact LegalVision’s contract lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What is a force majeure event?

It is an occasion that is unanticipated and out of the control of contracting parties. Such events are also known as superior forces or acts of God and include earthquakes, volcanic eruptions and pandemics. 

What is a force majeure clause?

It is a provision in a contract that details what contracting parties can do if an unanticipated event occurs that is out of the control of contracting parties.

What do I have to do to rely on a force majeure clause?

You will usually have to demonstrate that the occurrence of the force majeure event was beyond your control and the event has prevented you from fulfilling your contractual obligations. You will also have to show you have taken all reasonable steps to rectify the event and counteract any damage caused.

What happens if I rely on a force majeure clause?

You will be able to cancel your contract altogether, suspend the performance of your contractual obligations or be pardoned from any consequences that may flow from the non-performance of your contractual obligations.

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