Key Point
- If you do not have a Force Majeure clause in your contract, you cannot claim Force Majeure applies.
Force Majeure clauses are intended to prevent parties being held liable for a breach of contract if circumstances beyond their control block adherence with the contract. In Australia, Force Majeure is not a doctrine of the common law and the ability of a party to rely on Force Majeure depends entirely on the words of the contract. Force Majeure is purely a creature of contract.
If you do not have a Force Majeure clause in your contract, you will not be able to rely on Force Majeure.
Force Majeure clauses are typically found in the boilerplate section of most contracts relating to supply of goods or services (particularly construction agreements, commodity supply agreements and operation & management agreements).
Although Force Majeure clauses are intended to cover generic scenarios including explosions, war, riot, strike and acts of nature, the scenarios in which Force Majeure clauses are invoked are wider than ever and their consequences are commercially critical. A cut and paste of a boilerplate Force Majeure clause from a previous contract could be a recipe for disaster as the clause will be unlikely to be sufficient to protect your interests in relation to the new contract.
Before including a Force Majeure clause in your next contract, it is important to consider the practical effect of the clause in action. Careful drafting and calculated compliance is the most efficient way to avoid future problems.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
