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Force majeure adviser beta
A tool to help you assess if you (or the other side) can avoid performing the contract due to COVID-19 disruption.
Step 1: Use the slider to select if you are a supplier or customer
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1You are a supplier and cannot perform the contract due to COVID-19
You are a supplier and your customer says it cannot meet its commitments
You are a customer and your supplier says it cannot meet its commitments
You are a customer and cannot meet your commitments due to COVID-19
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Step 2: Use the slider to select the nearest description of your contract
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Step 3: Read the guidance. May the force be with you!
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Overall: Without a contract, or no force majeure clause, your situation will depend on local law.
Overall: Your contract is going to be the biggest deciding factor. The lack of a reference to pandemics or similar events is not fatal - what matters is how broad the clause is and what specific events it lists or excludes.
Overall: If your force majeure clause is clearly broad enough or specifically covers the disruption you are facing, it's a great starting point. But it may still have other strings attached.
Overall: You've got a force majeure clause that seems to cover your situation, and no obvious caveats. Great! But make sure you check what the consequences of relying on a force majeure event are - and if it's not clear, take the cautious approach.
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Since there will always be factual and legal uncertainties, it's a good idea to talk to your customer first, without delay, before taking any unilateral action or issuing formal notices, especially If you are not getting legal advice.
Unless you are confident of your legal rights, try talk to your customer first, before taking any action or issuing a formal notice.
These sorts of conditions are the stuff of litigators' dreams. You don't want to go there. The best policy is to get talking with your customer. That should not stop you from issuing a notice that you are impacted by force majeure (to reserve your rights and to follow any notice requirements in the contract). But if you're wrong, you might find yourself on the back foot with a claim for breach of contract from your customer. So unless you're sure, talk first before taking any definitive steps or issuing any formal notices that you intend not to comply with the contract.
Discuss with your customer what you can and can't deliver. You may be able to agree an interim arrangement, for example for partial delivery and modified payment terms. See our COVID19 tool, which will help you to frame up such a conversation.
There may be other parts of the contract that could help you such as price adjustment mechanisms or simply the right to terminate without cause.
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Document the factors that are causing you disruption, such as order cancellations and non-delivery by our own suppliers. Also document your own efforts (and costs) to resolve the situation.
Give notice to the customer and provide information to back it up - your contract may have specific requirements for that. It needs to be done promptly.
Document the factors that are causing you disruption, such as order cancellations and non-delivery by our own suppliers. Also document your own efforts (and costs) to resolve the situation.
Serve timely notices of the disruption you are facing (but see the above guidance).
Document the factors that are causing you disruption, such as non-delivery by your own suppliers. Also document your own efforts (and costs) to resolve the situation.
Document the factors that are causing you disruption, such as order cancellations and non-delivery by our own suppliers. Also document your own efforts (and costs) to resolve the situation.
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Make sure your customer hasn't sneaked in its standard terms of business (attached or referenced in your customer's orders or were sent to you by email). They may apply even if you never signed them.
If you have a contract, but you can't find a force majeure clause, check for anything else that deals with events outside of the parties' control. Look under Termination, or try searching for words like "frustration", "impossible", "control", "act of god", "unforeseen".
Excluded events. If any of the problems you are facing are in a list of exclusions in your force majeure clause, or you clause is narrowly written (e.g. includes only specific events which don't apply here) you can't rely on having a contractual excuse.
Make sure there are no strings attached (like foreseeability) - see the next item on the slider.
Business continuity measure which must continue even in the event of force majeure.
Business continuity measures, or specific actions you need to take (for example using best endeavours to secure alternative source of supply) - you may be required to do this even if it's onerous.
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©️ Denis Potemkin 2020
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