What if something goes wrong? What is a force majeure? Why do I need it?

What if something beyond your control goes wrong and you cannot deliver on time or at all?

What is your container ship gets stuck in a war zone, your delivery lorry crashes, your supplier suddenly closes?

What do you do?

Something happened out of the blue. Your container does not arrive.

What happens to those businesses waiting for their delivery?

What if they required parts to finish manufacturing a product?

What if they had resold the items in the container to some other business?

Any goods being produced would be delayed.

Any buyer of your goods would not get what they had purchased at the time that had been agreed. They may have resold the goods and so it goes on down the chain. Lots of unhappy people all looking at the person above them for compensation for their losses.

But it was not my fault you say. No one is interested if you had agreed to supply the goods by a certain delivery date. You are liable for breach of contract and payment of damages.

How Terms and Conditions can protect you in all this mess.

They can specify a delivery date that allows for external problems giving you some leeway.
They can contain a Force Majeure This mean that you are not in breach if problems are due to a major external cause over which you had no control. This used to be called the ‘Act of God’ clause but is now much wider. The more modern ones allow for problems caused by a pandemic providing cover against Covid and anything similar.

Disasters that can be included are:

Flood, drought, natural disasters
Epidemic and pandemic
Terrorist attack or riots
Nuclear, chemical or biological contamination
Fire, accident collapse of buildings
Non-performance by suppliers or contractors
Strikes
Travel restrictions

To rely on a Force Majeure, it must be:

Mentioned in the contract otherwise it does not apply.
Specify what events your Force Majeure covers as there is no set legal definition. It is what you agree it covers.
The Force Majeure event you rely on must make something physically or legally impossible and not just difficult or unprofitable.

Generally, it provides for all obligations to be suspended whilst the Force Majeure event continues.

When the Force Majeure event ends the obligations start again to apply.

In some cases, you may provide for the contract to be terminated if the event causing the problem continues for say six months.

What if there is no Force Majeure clause in the contract- or no contract or no Terms and Conditions?

If your container did not arrive you would be in breach of contract if the goods did not arrive in time. No one is interested that it is not your fault. You should have taken the proper legal steps to protect your business. You should have had proper Terms and Conditions.

This is a reason you need to have proper Terms and Conditions in place.

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The document is for guidance and is not legal advice because the application of laws depends upon the specific facts of each individual circumstance.