Force majeure

Force majeure clauses exist because not all risks can be managed through normal contract performance. They provide a structured response to truly extraordinary events—natural disasters, wars, pandemics, government actions—that make contract fulfillment impossible or commercially impracticable.

The scope of force majeure varies by contract. Some clauses list specific qualifying events; others use broader language about events beyond reasonable control. The definition matters enormously when an event occurs and parties dispute whether it qualifies.

From a procurement perspective, force majeure is a risk management tool. Well-drafted clauses include: specific trigger events, notification requirements, mitigation obligations, consequences during the force majeure period, and termination rights if the event persists beyond a defined period.

Force majeure should be distinguished from commercial difficulty. Price increases, supply tightness, or reduced profitability rarely qualify. The event must make performance genuinely impossible or illegal, not merely more expensive or inconvenient.

Frequently asked questions

What is force majeure in a procurement contract?

Force majeure is a contract clause that frees both parties from their obligations when extraordinary events beyond their control prevent performance. Qualifying events are things like natural disasters, wars, pandemics, and government actions that make fulfillment impossible or commercially impracticable. The clause defines when a supplier or buyer can legitimately fail to perform without penalty.

What events qualify as force majeure?

The events that qualify as force majeure vary by contract: some clauses list specific qualifying events, while others use broader language about events beyond reasonable control. Natural disasters, wars, pandemics, and government actions such as new sanctions or mandated port closures commonly qualify. The definition matters enormously when an event occurs and the parties dispute whether it applies.

Does a price increase count as force majeure?

Price increases, supply tightness, and reduced profitability rarely qualify as force majeure. The event must make performance genuinely impossible or illegal, rather than merely more expensive or inconvenient. Commercial difficulty is handled through pricing and escalation mechanisms, while force majeure is reserved for truly extraordinary events.

What should a well-drafted force majeure clause include?

A well-drafted force majeure clause includes specific trigger events, notification requirements, mitigation obligations, the consequences that apply during the force majeure period, and termination rights if the event persists beyond a defined period. Vague language creates disputes at exactly the moment the clause is needed, so the definition of qualifying events deserves careful drafting attention.

What should procurement do when a supplier invokes force majeure?

When a supplier invokes force majeure, procurement typically activates contingency plans and engages alternate sources while the supplier's obligations are suspended. A supplier rebuilding after an earthquake, for example, may suspend deliveries for months, so the buyer's protection comes from its own risk planning as much as from the clause. Checking whether the event actually qualifies under the contract's definition is also worth doing before accepting the claim.