This article outines what force majeure is, the benefits of having a force majeure clause and how to invoke one.
What is force majeure and why have a force majeure clause?
An event of force majeure is an occurrence that happens outside of the control of a party. The purpose of a force majeure clause is often to provide relief to one party if a force majeure event occurs and affects their performance of their contractual obligations. Why? As otherwise, that party would have to rely on the common law doctrine of frustration that only applies in limited circumstances where performance is impossible which is a high threshold to meet.
The concept of force majeure derives from the French Civil Code. Under French law, it applies regardless of whether it is expressly stated in the contract. That is not the case under English law where it does not have a settled meaning and therefore it is a matter of contractual language.
In whose interest is it to include a force majeure clause?
Typically, it is in the interest of the supplier (as the performing party) to include a force majeure clause. As it is prudent to define what would constitute a force majeure event (given that there is no settled meaning), a supplier may want to draft a fairly broad list of events that would constitute a force majeure event.
Supplier considerations | Customer considerations |
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How do you invoke a force majeure clause?
The burden of proof sits with the party seeking to rely on the force majeure clause and often where one party suffers a force majeure event, it will likely have an obligation to notify the non-affected party and take reasonable steps to mitigate such force majeure event. Although, the exact requirements will always depend on what the clause prescribes. Note: we have had recent confirmation that such reasonable steps does not require an affected party to accept non-contractual performance, such as accepting payment in a different currency to what was stated in the contract (as was the case in RTI Ltd v MUR Shipping BV [2024] UKSC 18 (15 May 2024)). As mentioned in the introduction, the purpose of a force majeure clause is to suspend the obligations of the affected party for the duration of the event.
Final thoughts...
If you are a customer, you may decide to omit a force majeure clause altogether from the agreement and wait to see whether the supplier seeks to include one. If you are a supplier, alongside your force majeure clause you may also want to include a customer dependencies/relief clause in the event you are unable to perform your obligations because of a failure on the customer to perform theirs. Keep an eye out for our article for more detail on that.
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.