English contract law – a force majeure guide

7th April 2020

We are receiving multiple queries regarding ‘force majeure’ and other potential ways of reducing contract exposure given the effects of COVID-19.

We hope this guide of relevant English and Welsh contract law will help but please do not hesitate to contact us with your specific query.

Force majeure clauses are included within contracts to limit liability where an event, outside your contemplation and control, means that you are unable to perform your obligations under the contract. Force majeure clauses specify the type of events that could delay or terminate the contract.

COVID-19 may fall within the description of a force majeure event, which will enable parties to rely on these particular clauses when they can no longer perform their obligations under the contract. But what if your contract does not include a force majeure clause, or you had a verbal contract?

We take a detailed look at:

  • Force majeure clauses in contracts
  • Contractual default/breach provisions
  • The common law doctrine of frustration in English and Welsh law
  • Other possibilities for termination in English and Welsh contract law
  • Recovering losses and insurance

If you terminate a contract in circumstances where you are not entitled to do so that in itself is a breach of contract entitling the other party to terminate and claim damages. The options available under the agreement should therefore be considered carefully and legal advice sought before action is taken.

Notwithstanding a party’s ability to terminate a contract, it is always important to assess the relationship between the parties before doing so. If there is an ongoing relationship, an alternative approach may be appropriate, e.g., renegotiating the contract with a view to varying its terms or following a prescribed dispute escalation procedure and/or mediation to try and achieve a mutually acceptable solution.

You can download our English and Welsh contract law – Guide to force majeure and other Covid-19 Contract Issues here, or if you require any legal advice on commercial contracts affected by COVID-19, please contact us.

This article has been co-written by Nicola Diggle and Heather Welham.

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