In uncertain times, businesses often rely on legal tools like force majeure clauses to handle unexpected challenges. And if the pandemic taught us anything it's that exceptional circumstances could be just around the corner, so it's better to be prepared for the worst.
In this article, we'll explain the basics of force majeure clauses in UK contract law and how they do that.
We'll cover what force majeure events are, how they affect contracts, and how they're used in different types of agreements. We'll also give tips on what to do if someone claims force majeure against you.
Table of Contents
- What does force majure mean?
- What is a force majeure clause?
- What is an example of force majeure?
- Which types of UK contracts typically include force majeure clauses?
- How do force majeure clauses work?
- What should we do if our customer or supplier claims force majeure?
- How long can force majeure events last?
- Can someone claim force majeure if the contract becomes inconvenient or economically viable for them?
- What happens if there is no force majeure clause in a contract?
- What should be included in a force majeure clause?
What does force majure mean?
Force majeure is a legal term that refers to unforeseen events or circumstances beyond anyone’s control that make it difficult or even outright impossible for parties to fulfill their contractual obligations.
What is a force majeure clause?
In UK law, a force majeure clause excuses parties from performing their contractual obligations if certain unforeseen events or circumstances occur.
However, the specific details of what qualifies as a force majeure event and how it affects the contract depend on the language of the contract itself.
What is an example of force majeure?
Common examples of force majeure include:
Natural disasters (e.g. earthquakes, floods, or wildfires)
Acts of war, terrorism, or civil unrest that disrupt normal business operations.
Government actions or regulations that make fulfilling contractual obligations impossible or illegal.
Epidemics or pandemics that cause widespread disruption to supply chains, travel, and workforce availability.
Strikes, labour disputes, or other industrial actions.
Severe weather conditions or extreme temperatures that make it unsafe or impractical to carry out contractual duties.
The specific events covered by force majeure clauses can vary depending on how they’re defined in the contract.
Which types of UK contracts typically include force majeure clauses?
Force majeure clauses can be found in various contracts, including:
Commercial agreements for the sale of goods or services
Construction contracts
Lease agreements
Loan agreements
How do force majeure clauses work?
When a force majeure event mentioned in the contract happens, the party affected might not have to do what they promised for as long as the event lasts. Sometimes, the contract might even end because of it.
However, affected parties are often expected to try their best to minimise the impact of the problem and keep doing what they promised as far as possible in the first instance.
Force majeure clauses should say what steps affected parties should take if one of these situations arises, like telling the other party about the situation within a certain timeframe.
What should we do if our customer or supplier claims force majeure?
If your customer or supplier claims force majeue, you should carefully review the contract terms to understand the requirements and procedures outlined.
The best next step is to communicate with them to learn as much as possible about the force majeure event and what they have done (or are doing) to minimise the impact of the problem so far.
You may renegotiate with the affected party to find a mutually acceptable solution by adjusting deadlines or payment terms in some circumstances. If not, the contract may be terminated, and both your and the affected party's contractual obligations may end.
How long can force majeure events last?
Force majeure clauses often include a deadline and, if the force majeure event continues past this deadline, either party can say they want to end the contract.
For completeness, it’s wise to include what happens next if the contract is terminated because of a force majeure event in the clause to avoid potential disputes.
Can someone claim force majeure if the contract becomes inconvenient or economically viable for them?
You can't claim force majeure just because the contract becomes inconvenient or the economic landscape changes.
These kinds of clauses are designed to address extraordinary events beyond everyone's control, not ordinary risks or economic changes. As such, a customer or supplier can’t claim force majeure because the deal they’ve struck isn’t profitable or convenient.
If a party believes they have valid reasons for not fulfilling their obligations under the contract they should seek legal advice to explore other avenues such as termination clauses, or enter into renegotiations with the other party to get things back on track.
What happens if there is no force majeure clause in a contract?
If there is no force majeure clause in a contract, then it can’t be relied on to excuse performance in the event of such occurrences. Therefore, disputes over performance in the face of unexpected circumstances could lead to litigation, where parties have to argue their case based on common law principles and contractual interpretation.
Parties may still be able to rely on other avenues in the absence of a force majure clause under certain circumstances, such as frustration of the contract. However, these legal doctrines typically have stricter requirements and may not offer as much flexibility as a well-defined force majeure clause.
The lesson here is that your contracts should include force majeure clauses where relevant to avoid uncertainties and potential disputes. A commercial lawyer can do this for you or advise on whether it’s necessary before you enter into a legally binding contract.
What should be included in a force majeure clause?
A force majeure clause should include:
A clear definition of the events or circumstances that qualify as force majeure.
Procedures and timelines for giving notice when a force majeure event happens.
How the occurrence of a force majeure event will affect the performance of the contract (i.e. deadline extensions or termination of the contract after a certain amount of time).
What the affected party should do to mitigate the impact of a force majeure event.
Provisions for the allocation of risk between parties in the event of a force majeure event.
Circumstances under which either party has the right to terminate the contract due to a force majeure event.
Provisions for resolving disputes arising from the force majeure clause.
How can Lawhive Help?
At Lawhive, our team of expert commercial solicitors can help with:
Drafting and reviewing contracts with force majeure clauses to suit your specific needs.
Clear and practical legal advice on your rights and obligations under a contract if you’re facing a situation where force majeure may apply.
Representing you and your business in negotiations, mediation, arbitration, or litigation related to force majete.
Assessing and mitigating risks associated with force majeure events.
Negotiating contracts to ensure force majeure clauses are fair and balanced.
With Lawhive, you can be confident that your business contracts are legally sound, well drafted, and effectively protect your interests in the face of force majeure events.
Contact us to learn more and get a fixed fee quote for the services of a specialist lawyer.