In a contract, two (or more) parties will have obligations to perform. In most contracts there will be a force majeure clause which details a list of events that are out of the parties’ control, and, if they occur, may excuse the parties from performing their respective duties.

There is also scope to temporarily suspend a party’s obligations (i.e. where some contract terms require performance within a specific period of time, if a force majeure event occurs, they would not need to perform their obligations for some time (depending on what the contract says) to allow the fallout of the force majeure event to pass, so that the contract can be fulfilled. The force majeure clause effectively “pauses” the contract.

During the Covid-19 Pandemic, the government-imposed lockdowns meant that certain businesses were prevented from operating, and various force majeure clauses were triggered. Disputes arose where “pandemic”, or “government policy” were not specified in the force majeure clause, and therefore neither event could be relied upon.

In an increasingly sensitive/hostile world, businesses may require a broader understanding of force majeure clauses and how they operate. Ultimately, it provides a non-contentious resolution for when events make the contract impossible to perform. Moreover, where there is not a force majeure clause and a contract becomes impossible to perform, the doctrine of “frustration” may apply – however, frustration only applies in narrow circumstances, and offers limited relief / remedies.

Even when force majeure events occur, some parties litigate for breach of contract in any event.

Recent Case Law:

The Supreme Court shed light on the practicability of force majeure clauses in RTI Ltd v MUR Shipping BV [2024] UKSC 18.

It was held that:

1. Any party seeking to rely on a force majeure clause, must first use “reasonable endeavours” to overcome the event.

It is important to understand that the contract that was in dispute specifically stated that a force majeure event is an event “…that cannot be overcome by reasonable endeavours from the Party affected.”

However, the reasonable endeavours proviso is so common that even without it, the court would have interpreted the clause as containing a reasonable endeavours proviso in any event. It is now certain that a party must first use reasonable endeavours to work around the event.

2. A party seeking to rely on a force majeure clause does not have to accept any non-contractual proposal by the other party to work around the event.

If one party (“Party A”) triggers the force majeure clause and cannot overcome the state of affairs through reasonable endeavours, but the other party (“Party B”) provides workable suggestions that deviate from the “contractual performance” of the contract, then Party A may reject the offer and rely on the force majeure clause.

For example, if Party A is shipping goods through the Suez Canal (and the route was confirmed in the contract) (“the Shipment”), but there is another shipping vessel blocking the Canal, then Party A could trigger the force majeure clause (permitted this was covered in the list of force majeure events in the contract).

Party B, however, needs the Shipment, and suggests Party A changes their course and sail around Africa.

Because this performance of the contract would not be “contractual performance”, Party A is able to reject the proposal and rely on the force majeure clause.

Need Help?

Has an event occurred that means that you or your business are unable to perform your duties under a contract which contained a force majeure clause? Is the other party to the contract threatening litigation for breach of that contract? Contact Griffin Law for more information and details on how we can assist.

Griffin Law is a dispute resolution firm comprising innovative, proactive, tenacious and commercially-minded lawyers. We pride ourselves on our close client relationships, which are uniquely enhanced by our transparent fee guarantee and a commitment to share the risks of litigation.  For more details of our services please email justice@griffin.law or call 01732 52 59 23.

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