"Force majeure" clauses are included in contracts usually to excuse one or more of the parties from liability in a range of circumstances, where the performing party is delayed in performing or unable to perform its obligations but this is not its “fault”. Although they can have very important consequences, such clauses are often found towards the end of the contract along with other “boilerplate” provisions (which you may recall from our earlier "B" article). These have become much more significant since Brexit and the Covid pandemic.
The concept and term force majeure are derived from French law, but have no recognised meaning or consequences under English law. Therefore in order to be relied on, a force majeure clause must be included in the contract.
The scope and effect of a force majeure clause needs to be agreed between the parties on a contract-by-contract basis and can often be heavily negotiated. Customers with few or no obligations other than to pay (which is almost universally stated to be not a potential force majeure situation) may wish to either leave force majeure out altogether or narrow its scope. Suppliers may seek the opposite, looking for expansive definitions of what might amount to force majeure, in order to increase their ability to rely on the clause if obligations become difficult to perform. Some clauses contain long lists of events that will excuse delay (etc.), but often clauses simply refer to a party not being liable for a breach caused by circumstances “beyond its reasonable control”.
Well prepared clauses will not only define force majeure but will go on to outline its consequences. Commonly agreed consequences are suspension of obligations and liability for the period of the force majeure, and ultimately a right to terminate if the force majeure persists. Again, this is a matter for negotiation between the parties, and each side will be looking to safeguard their own commercial interests.
Where force majeure clauses are not used or do not apply, the common law doctrine of “frustration” may be available to the parties if the contract is “impossible” to perform, without fault. However, this is a narrow concept which does not offer the same contractual remedies as a force majeure clause.
For more information, please contact Daniel Fournier or any member of the commercial contracts team.
Daniel Fournier