When Can Parties to a Contract Rely on Force Majeure?
25 MAR 2022
Many commercial contracts contain force majeure clauses, although they may not be labelled so explicitly or necessarily make reference to the term ‘force majeure’. The purpose of these contractual clauses is to defend the parties from a breach of contract claim in the event they are unable to perform their obligations because of an event that is outside their control. These are known as ‘supervening events’, and can be things such as war, pandemics and hurricanes, although every eventually is unlikely to be listed in the clause. These clauses therefore help parties to understand what their obligations are should such an event arise and what to do if they are unable to perform their contractual obligations because of a supervening event.
Neither statute nor the common law provides a definition either force majeure itself, or a force majeure event in English Law. When drafting a contract, therefore, the parties can decide between themselves what kind of event will amount to a force majeure, and what consequences this will have on their obligations.
Covid and Force Majeure
Covid’s huge effect on business, specifically the nationally mandated lockdowns, were seen by many businesses as the kind of ‘supervening event’ their force majeure clauses were drafted for. In sectors including travel and hospitality, for example, carrying out basic contractual obligations became unnecessarily burdensome and financially difficult.
Recently various legal challenges were brought on the basis of force majeure. The connecting theme which emerged from these challenges was their idiosyncrasy: the meaning of a force majeure clause, and therefore its effect, entirely depends on its wording. The Court therefore has to decide whether the clause applies in the relevant circumstances.
It is useful to note that when the Courts interpret the words of any force majeure clause, they look to determine objectively what the parties intended when they made the contract, allowing the words their natural and ordinary meaning. What the Courts have been resistant to do is relieve a party from an unfavourable contract: they have made it clear the pandemic should not be a pretext to remove oneself from unwanted contractual obligations, even if it has made it more difficult to fulfil them.
War and Force Majeure
It is not just the pandemic that has highlighted force majeure clauses: the exceptional sanctions regime which has been imposed on Russia by the EU, US, UK, Japan (and others) in response to its invasion of Ukraine has also been seen by many as a ‘supervening event’. First of all, force majeure and war is twofold: for the clause to apply, the war has to not only exist, but actively stop the parties’ ability to fulfil their contractual obligations.
The clause made reference to ‘war’, this may not be sufficient given Russia has not technically declared war on Ukraine, calling the conflict a ‘special military operation’. Much may therefore depend on how ‘war’ is defined in the contract.
Sanctions are even more complex an issue. It is relatively unlikely that sanctions would be specifically mentioned as a force majeure event, and so a wide definition of ‘hostilities’ or ‘conflict’ may have to suffice, as this could cover the broader consequences of such a conflict. Provided, however, either member of the party is not on a sanctions list, there is no prohibition to continue the contractual relationship with that party: a political objection to Putin, therefore, will not count as an intervening event.
On another hand, if a party is unable to perform its contractual obligations because this would be in breach of the currently imposed sanctions, it should be possible to terminate the contract without risking damages since some contracts might have a provision allowing termination without notice on this basis.
In English law there is also a doctrine of frustration by which a contract may be discharged when something occurs after the formation of the contract which makes it legally or commercially impossible to fulfil the contract. It might be possible to terminate the contract because the contract was frustrated.
If you are in a position where you might be effected, please contact our team for advice.
Yulia BarnesManaging Partner
Yulia Barnes is our Managing Partner. She is an experienced solicitor and advises on a wide range of contentious and non-contentious matters for both private and corporate clients.Yulia started her legal career at a large international Magic Circle firm. She then became a partner at a regional law firm and headed a Dispute Resolution Department. She then moved in-house before starting her own Boutique practice, Barnes Law, with the aim of providing exclusive services to high net-worth individuals and privately-owned businesses. More details can be found on her LinkedIn profile.
Expertise Yulia and her team are widely recognised for their professional and practical approach to matters. She is committed to ensuring that her clients’ objectives are achieved in the most cost-effective way possible.
Approach Yulia has a wealth of experience working with businesses of all sizes: from large multinational corporations to start-ups. She has particular expertise in a hospitality industry, investment funds, private and corporate clients, and focuses on startups and technology-driven companies. Yulia brings the same level of attention to detail, professionalism and a personal touch to every case and client, and truly immerses herself in her clients’ businesses. She prides herself on her problem-solving, commercially astute approach and her track record of partnering with clients to help them achieve their strategic objectives.
Will joined Barnes Law as an Associate Solicitor in Spring 2023, shortly after qualifying in September 2022.
Will works mostly on real estate and corporate/commercial matters. Will enjoys providing advice on transactional matters.
Away from the office, Will can be found reading or playing golf. While he played rugby until university, and rowed throughout his degree, he now tends to watch both from the sidelines. During the winter he can also be found skiing.
Will plans to continue developing his legal skills and experience at Barnes Law, under the expertise and guidance provided by Yulia.
Mark is an experienced solicitor whose practice areas include intellectual property (IP), IT, data protection and general commercial law.
Mark advises businesses of all sizes – from sole traders to corporations. Among his clients are: clothing and lifestyle brands, restaurants and food suppliers, IT companies, banks, hedge funds and venture capital firms, education providers, medical and pharmaceutical brands.
Outside of his practice, Mark also advises members of the Institute of Directors as part of its Directors’ Advisory Service.
- Prosecuting a UK trademark application on behalf of an education provider and representing them in related UK IPO opposition and revocation proceedings;
- Advising a publisher and a delivery business on data protection matters, B2B and B2C Ts & Cs of sale, website and app Ts & Cs, all aspects of global brand protection;
- Advising footwear brands, alternative asset managers and hedge funds on their global brand protection, including overcoming various refusals, representing them in opposition proceedings and settlement negotiations;
- Representing a central bank in opposition proceedings before the UK IPO;
- Advising a lifestyle brand concerning trademark clearance and protection, negotiations for a website/app development and maintenance agreement.
Ioulia TatawatFamily Law Adviser
Ioulia has a solid background in family law and offers guidance, clarity, and support to clients during one of their most challenging times in their life.
She advises on all three pillars of separation: divorce, children matters and financial settlements. Ioulia is a member of Resolution and is keen to try to settle matters at early stages.
Ioulia is dedicated to assisting clients and navigating them through their legal matters with clarity and support.
Alex joined Barnes Law in September 2023 after finishing his master’s degree in law. Prior to joining Barnes Law, Alex worked in property litigation at Ashfords. Alex assists Yulia on a variety of both contentious and non-contentious matters.
Outside of the office, Alex enjoys reading and hiking. Prior to working in law, Alex was a competitive tennis player.
Alex continues to develop his skills in legal practice under Yulia’s guidance, he plans to sit the Solicitor’s Qualifying Exams (SQE) in 2024.
Mehves joined Barnes Law in August 2023, right after graduating from Queen Mary, University of London (LLB Senior Status). As part of her qualification journey, Mehves is currently pursuing her Legal Practice Course (‘LPC’) at the University of Law. She also holds a degree in European Union Law from Maastricht University, Netherlands.
Mehves works closely with Yulia on a variety of contentions matters and also writes Barnes Law’s legal blogs, manages social media accounts and is responsible for marketing.
Outside of work and studies, she enjoys running, tennis and yoga.
Mehves is looking forward to developing her legal skills at Barnes Law.
Julia PodgornovaInvestor Relationship Manager
Julia guides clients in making important business decisions based on comprehensive risk assessment and strategy. She supports investors in devising strategies designed to maximise each business’s potential from pre-seed to IPO.
Julia’s particular area of expertise are IT start-ups at different stages. Julia supports business through their fund-raising journey. As an Investor Relations Manager, Julia communicates with investors to facilitate a smooth round and legal part of each transaction.
In her free time Julia enjoys sailing, ballroom dancing, art exhibitions and travel.