Force majeure is a French phrase, and it is a concept that applies in France and other civil law jurisdictions. If a force majeure event occurs in these countries, the obligations of the parties will be suspended.
Force Majeure is Not Automatic in England
However, in England and other common law countries a party to a contract can only claim force majeure if the contract specifically allows him to.
So, in the circumstances described above, if there is no force majeure clause in your contract with your customer, you might be open to a claim from him for breach of contract. If your contract with your supplier has no force majeure clause, you might have also have a claim against him but claims can be time-consuming to pursue some redress against the supplier.
It is possible in this situation that the doctrine of “frustration” may apply so that if a contract becomes impossible to perform, then the contract may be treated as terminated. But this is not necessarily what either party wants and it might well involve an argument that ends up in court. Frustration can result in the contract being brought to an end, but not suspended.
Your Force Majeure Clause
It is therefore sensible to deal with the risk by having a suitably worded clause in your contract.
When you do have a force majeure clause, check to see what situations are covered by the clause and you should also check what the consequences are:
does the clause require the affected party to give immediate notice of the event?
does it merely suspend obligations?
or
does it allow termination of the contract if the force majeure event is not resolved within a specified time?
A good clause will define what is meant by force majeure, and specify the consequences.
A Sample Force Majeure Clause
The Supplier shall not be liable to the Purchaser for failure to deliver nor shall the Purchaser be liable to the Supplier to take Products ordered under this Agreement when:
(a) the failure is due to a cause outside that party’s control including, but not limited to, acts of nature, war, terrorism, sabotage, fire, explosion, flood, action of any governmental authority, embargo, unavailability of raw materials supply, strike or labour dispute (except of the workforce of the party claiming force majeure), and
(b) it gives notice of the event as soon as practicable to the other party and in any event within three days of becoming aware of the event..
A party claiming force majeure must use all reasonable efforts to avoid or mitigate the effect of the force majeure event.
If a force majeure event continues for more than 60 days either party may give notice to the other to terminate this Agreement.
Think Through Your Risks
When writing a force majeure clause, you can simply refer to an event beyond the control of the parties but it is more common to have a list.
Be sure to include the risks that you want to guard against in that list. If, for example, you are involved in work that needs internet accessibility, you will want to include power failure and internet disruption as force majeure events.
Also, bear in mind that a party claiming force majeure must use all reasonable efforts to avoid or mitigate the effect of the force majeure event. You cannot simply use a minor storm as an excuse to avoid your contractual obligations.
