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ARTICLE · 29 SEPTEMBER 2022

Force Majeure A Measure To Mitigate Risk

There are unavoidable circumstances when despite best intentions, a contracting party is unable to perform in the manner contractually agreed. To mitigate liability flowing from such failure...

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Introduction

There are unavoidable circumstances when despite best intentions, a contracting party is unable to perform in the manner contractually agreed. To mitigate liability flowing from such failure to perform, it is common for parties to agree on a 'force majeure' (FM) provision. A FM provision has the effect of excusing the party affected by the occurrence of specified events,from the performance of its obligations under the contract, to the extent it's performance is affected by such specified event(s). Typically, the events falling under FM are those which are not within reasonable control of the contracting parties – whether an act of God or otherwise.

The concept is straight-forward, and one should not expect much difficulty in preparing a FM provision. Except that the consequences of not having a well-crafted FM provision can result in the affected party being burdened with liabilities arising from non-performance of contract. Thus, a risk which the

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