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Force majeure and COVID-19

A lot of us are thinking about (or being asked about) whether COVID-19 is a 'force majeure' event for the purposes of English law contracts. Unfortunately, the answer is far from straightforward, but we look at some of the most commonly raised issues.

April 2020

This article provides a general guide to force majeure and should not be taken as legal advice. You should always take specific advice before you decide what to do regarding particular circumstances – not least because the application of force majeure will normally be quite context sensitive, particularly concerning the terms of the contract to which the circumstances relate. Please contact us for tailored advice.

What does the term 'force majeure' mean?

Most people assume that force majeure means anything outside the control of a party to a contract. In fact, the term 'force majeure' does not have a specific legal meaning in English law (Hackney Borough Council v Doré [1922] 1 KB 431, at 437.). Although use of the term in contracts is very common, its meaning depends on the particular contract in which it is used. This means that each contract may be different in the way it applies rules about force majeure, and in order to decide how it applies in any given case, you will need to look at the relevant wording of the particular contract.

What sort of circumstances will normally be treated as a force majeure event for the purposes of a contract?

The circumstances in which a force majeure clause will apply will depend on the wording of the relevant term of the contract. Force majeure clauses may vary in the way that they are drafted:

  • some clauses are specific (eg containing a list of specific events that are treated as being force majeure, such as fire, flood, war or similar)
  • some clauses are general (eg referring simply to events outside the reasonable control of a party to the contract), and
  • some clauses are a combination of the two (eg a list of specific events with a sweep-up clause referring to any other events outside a party's reasonable control).

How the clause is worded is important because, in order to decide whether or not you can rely on a force majeure clause, the first step is to decide whether or not the event that has caused the problem falls within the definition of force majeure event used by the relevant contract (see below).

What will you have to show in order for you to be able to rely on a force majeure clause in order to excuse you from non-performance under a contract?

In order to be able to rely on a force majeure clause in a contract, you will need to be able to show the following:

  • The event that has given rise to your non-performance under the contract falls within the definition of force majeure in the contract (that is, the event is covered by the force majeure clause) and your non-performance was caused by the relevant event.
  • The event and your non-performance were due to circumstances beyond your control.
  • There were no reasonable steps that you could have taken to avoid or mitigate the event or its consequences.

You may also need to show that you were not aware, at the time of entering the contract, that the circumstances giving rise to the event of force majeure were likely to occur (see further, below). There is a flowchart at the end of this article that will give you a general idea of whether you are likely to qualify for relief under a force majeure clause in any given circumstances.

How do you show that the event falls within the force majeure clause in the contract?

This depends on the wording of the force majeure clause. Some points to bear in mind:

  • If the clause only refers to a list of specific types of event (eg fire, flood, war or terrorist attack), then unless the event that has occurred is one of those listed, you will not be able to rely on the clause.
  • If the clause is more general (for example, it refers to any event outside your reasonable control), then that will make it easier for you to rely on it.
  • If the clause refers only to performance of your obligations being prevented by the relevant event, then you may not be able to rely on the clause if your performance has been made more difficult or delayed, but not completely prevented (in other words, you can still perform, but it is more difficult to do so and/or you cannot perform as expected).
  • This means that you are more likely to be able to rely on the clause if the wording covers any failure or delay in performance, not just you being completely prevented from performing.

So, in summary, the event that has occurred must fall within the categories of force majeure event set out in the relevant clause, and the clause must also cover what has happened as a result (that is, the type of adverse effect that it has had on your performance).

Can you rely on a force majeure clause if you are still able to perform, but it has just got more expensive or difficult to do so?

It depends on the circumstances, but probably not. For example:

  • The fact that it is more expensive to perform will not normally entitle you to rely on the force majeure clause (so a rise in underlying costs or expense will not normally be treated as a force majeure event see – Brauer & Co (G.B.) Ltd v James Clark (Brush Materials) Ltd [1952] 2 All E.R. 497).
  • The fact that it is more inconvenient and/or more difficult to perform will also not normally entitle you to rely on the clause. If the difficulty was due to circumstances outside your control and was so great that no reasonable person in similar circumstances would be likely to overcome it, then that might be an exception.

This is linked to the fact that (as mentioned above), in all cases, in order to rely on a force majeure clause, you will have to be able to show that you have taken all reasonable steps to overcome or mitigate the problem. If there are steps that you can reasonably take (eg hiring temporary staff, invoking backups, spending some money), then you will need to have done it before you try and rely on the force majeure clause.

What if there is more than one way for you to perform your obligations, and a force majeure event affects only one of the ways in which you can perform?

If, for example, there are three possible ways in which you could perform your obligations under a contract, and a force majeure event affects only one of them, then you will probably not be able to rely on force majeure in order to excuse any non-performance – you would be expected to use one of the unaffected methods of performance instead.

Does the force majeure event have to be the cause of your non-performance?

Yes. If the non-performance is caused by something other than the force majeure event, then you cannot rely on the force majeure clause in the contract.

Does the force majeure event have to be outside your control?

Yes. Even if the event that has occurred falls within the definition of force majeure in the contract, unless the occurrence of that event is also outside your control, you cannot rely on the force majeure clause in the contract.

Will a force majeure clause cover events brought about by your own act or omission, negligence or deliberate default?

No. Unless it very clearly says otherwise, a force majeure clause will not normally cover any circumstances brought about by a party's own acts or omissions or their negligence or wilful default (see New Zealand Shipping Co v Société des Ateliers et Chantiers de France [1919] AC 1, 6).

Will a force majeure clause cover events brought about the act or omission of a third party in the supply chain, such as a sub-contractor?

Ordinarily, the failure of a third party in the supply chain (such as one of your sub-contractors) to comply with the contract to which they are a party will not be treated as an event of force majeure (see Lebeaupin v Richard Crispin and Company [1920] 2 K.B. 714).

However, if the non-performance by the third party is in turn caused by an event outside the third party's control – and is something that would have been treated as an event of force majeure if it had happened to you – then depending on the wording of your force majeure clause, it may in those circumstances be treated as an event of force majeure.

Do you have to take all reasonable steps open to you to overcome or mitigate the problem, before trying to rely on the force majeure clause in the contract?

Yes. If you want to rely on the force majeure clause, you will have to be able to show that there were no reasonable steps that you could have taken to overcome or mitigate the event or its consequences. This means that, before you try and rely on the force majeure clause, you must first consider if there is anything you can reasonably do to mitigate the relevant problem and, if there is, do it.

Can you rely on force majeure if, when you entered into the contract, you knew that the circumstances on which you want to rely were likely to arise?

No. For example, now that the coronavirus epidemic has started, if you enter into a contract after this point and then have problems performing as a result of coronavirus, you may not be able to rely on force majeure unless the contract specifically covers coronavirus and its consequences, and provides for what happens if it affects performance of the contract.

Can you terminate the contract if a force majeure event adversely affects a party's performance?

The occurrence of a force majeure event that adversely affects a party's performance will normally only permit the termination of the contract if and to the extent that the contract says that a party can terminate it as a consequence of the force majeure event. Force majeure clauses often include an express power of termination that can be invoked if the delay due to force majeure continues for a certain period of time.

In the absence of an express power of termination, the position is more complicated and you may have to try and rely on different legal doctrines to try and bring the contract to an end, so specific advice will be required.

What if there has been a force majeure event (as defined in the contract) but it has not actually had an adverse effect on either party's performance?

The mere fact that there has been a force majeure event (without that force majeure event being the cause of a failure by either party to perform its obligations under the contract) does not of itself mean that either party can get any relief from performance under the contract, or terminate the contract.

If, for example, a force majeure event occurs and one of the parties no longer wants to proceed with the contract as a result, then unless the force majeure event has actually had an adverse effect on performance by either party so as to bring it within the ambit of the force majeure clause, it will not normally give either party a right to change or terminate the contract.

For example, if you have an advertising contract and no longer wish to carry on with the advertising because of the coronavirus epidemic, unless the epidemic causes one or both parties to be unable to perform under the contract, absent a specific term of the contract entitling you to do so, you are not likely to be able to use force majeure as an excuse for early termination of the contract.

Should you deal specifically with coronavirus (and other epidemics) in contracts moving forward?

As a general point, there is at least one case (Lebeaupin v Richard Crispin and Company [1920] 2 K.B. 714) that has suggested that an epidemic would normally be treated as an event outside a party's control.

However, you should cover the current coronavirus epidemic using specific terms – either as an addition to your force majeure clause, or separately – since it's a circumstance that you are now aware of and so it would not normally be covered by an ordinary force majeure clause (see above).

If the force majeure clause in a contract includes formalities to be complied with in order to invoke the benefit of the clause, do you have to comply with them?

Yes. If, for example, the force majeure clause requires that a party wishing to rely on it has to give a particular type of notice to the other party, then that requirement will normally need to be complied with in order for the clause to be relied upon. If the required notice is not given, then it may not be possible to rely on the force majeure clause.

What if you are adversely affected by a force majeure event and, as a result, you would be able to fulfil some contracts but not others?

There may be some circumstances in which a force majeure event has an adverse effect on your ability to fulfil multiple contracts, and which leaves you in the position in which (for example):

  • you can fulfil some contracts but not others, or
  • you can fulfil all of the contracts, but only to a partial extent.

In circumstances like these, as long as you act reasonably, you can normally choose how you want to approach this. You might, for example, choose to fulfil only some contracts, or all of the contracts to a partial extent. However, the rules about this are complicated, so you should get specific advice about this before you decide how to act.

Are there any other contractual rules that apply independently of force majeure in situations where a party's performance is prevented or delayed by circumstances outside its control?

Yes. If a party has to perform an obligation under a contract within a reasonable time – that is, the contract does not provide for a specific time for performance of the obligation concerned – then if performance is delayed due to reasons outside the control of the relevant party, that may be taken into account in deciding whether performance has taken place within a reasonable time, and therefore whether the party is in breach. What is a reasonable time for performance is assessed in the light of all the relevant circumstances.

This rule only applies where no time for performance is specified and where performance has been wholly prevented rather than just inhibited. This is usually referred to as the rule in Hick v Raymond & Reid, after the principal case in which it was applied. The rule only acts a potential defence to a claim for non-performance, not as something positive that the non-performing party can rely on to continue non-performance.

In addition, it is possible for a contract to be frustrated (and therefore treated as having come to an end) as a result of a force majeure event, but that is quite a complicated doctrine and outside the scope of this article.

See here for more on the doctrine of frustration.

Force majeure flowchart

This flowchart is a general illustration of the overall decision making process likely to be involved in deciding whether force majeure is relevant to a given set of circumstances. Again, this is intended only as a general guide and should not be used on its own to support a particular decision (not least because it doesn't cover every factor that might be relevant to a given decision – see the FAQs for some examples of factors not included in the flowchart).


If you have any questions on this article please contact us.

Documents
Glyn Morgan


Glyn looks at the application of force majeure rules to English law contracts.

"You should take specific advice before you decide what to do in particular circumstances…the application of force majeure will normally be context sensitive."