Authors: Amy Ryburn
Published: 31 August 2021
Pages: 23

Introduction

Force majeure clauses often do not get much attention until an unexpected event happens which requires contracting parties to revisit the terms of their contracts. Frequently they are treated as contractual boilerplate – clauses lawyers grab from a precedent or a previous contract they have worked on and stick somewhere at the end of a contract without a great deal of thought or understanding of their intent or the implication of including such a clause. Whether they are “short form” or “long form” often does not depend on any considered analysis of risk or discussions between contracting parties and their lawyers, but on the parties’ respective appetites (or lack of appetite) for a lengthy document.
It is therefore not surprising that when COVID-19 hit it came as a bit of a shock to some parties that not all force majeure clauses are created equal, in practice there is quite a lot of variation in how they are drafted, and (most critically) they do not always offer the protection that one or more contracting parties expected. In many cases there was simply no easy, unequivocal, answer to the question “am I relieved of my contractual obligations as a result of the pandemic?”
The last 18 months or so have provided a cautionary tale on the risks of inadequately considering force majeure clauses when drafting and negotiating contracts (or, indeed, leaving them out altogether). As a result, these clauses are taking a more prominent role in negotiations and in resulting contracts. There is a greater need than ever before for all those involved in drafting and reviewing commercial contracts to be familiar with how force majeure clauses typically operate, the issues that underpin them, and the potential pitfalls to avoid.

Content outline

• The purpose of a force majeure clause
• Case law on force majeure clauses
• Issues to consider when drafting force majeure clauses
• Ensuring the clauses work in context