If you are considering whether a force majeure clause can assist in dealing with current circumstances, we have set out below a summary of the main points to consider.
The key takeaway is not to assume that a standard force majeure sweeper/general wording in your contract will be sufficient - much depends on the context of your particular circumstances, the actual wording and the other contractual terms.
Before engaging with your commercial partners and customers, do consider the following:
- Check that your definition of force majeure makes specific reference to events such as "epidemic", "pandemic" or "outbreak of widespread illness".
- Consider whether your situation aligns with mandatory government instruction such that the parties are no longer able to perform the contract.
- Do not assume standard force majeure ‘Act of God’ sweeper/general wording will be sufficient.
- Check the legal position before invoking any force majeure clause rights (such as termination) in order to avoid an inadvertent breach.
- Check the other provisions of your force majeure clause carefully to ensure that you comply with the notice and claims requirements in the force majeure clause. Are there step-in, suspension and/or termination rights?
- Consider whether there is an alternate way to perform the contract – party cooperation with sensible workarounds is likely to have a far better outcome for all parties involved.
- Remember that you can always agree on an alternative way forward which might, for example, involve a temporary suspension rather than termination. Termination is often impractical and undesirable.
Take legal advice where necessary. We are here to help in these unprecedented times and can provide quick remote advice.
Three key questions to ask yourself:
- What is the nature and context of your particular contract and circumstances?
- What is the exact wording in the relevant force majeure clause?
- What are the other general terms of the contract which might be relevant?