In recent months, the term force majeure is not merely a legal term, it has turned into everyday business conversations especially with disruptions linked to the Middle East, global supply chains, and the oil and gas sector.
But what does force majeure actually mean?
This article breaks it down for you on how does it work in a contract, and what happens when there is no force majeure clause at all?
What is Force Majeure?
Force majeure (often misspelled as force majure) means “superior force.”
In legal and commercial terms, it refers to events beyond a party’s control that prevent them from fulfilling a contract.
These events are typically:
- Unforeseeable
- Unavoidable
- Outside the control of both parties
Common examples include war, natural disasters, government actions, and large-scale disruptions like pandemics.
At its core, force majeure is about one thing: when performance becomes impossible due to external events, liability may be reduced or removed.
How does force majeure work in a contract
Force majeure only truly works when it is written into a contract. A typical clause allows a party to:
- Delay or suspend obligations
- Avoid penalties for non-performance
- In some cases, terminate the agreement
However, it is not automatic protection. Businesses must:
- Prove the event qualifies
- Show that performance was genuinely impacted
- Demonstrate efforts to reduce or avoid the disruption
This is why the wording of a contract is critical. A vague or narrow clause can be just as risky as having none at all.
The clause
Force Majeure means an occurrence beyond the control of the Party affected impeding the performance of the affected Party’s obligations under the Supply Conditions, provided that such occurrence could not have been reasonably foreseen at the time of entering into the Supply Conditions and that the Party affected could not reasonably have avoided or overcome it or its consequences, including but not limited to, act of God, act of public enemy, war, blockage, strike on a national level, riot, lightening, fire, storm, flood, explosion, and Government restriction.
The Law of Force Majeure
The law of force majeure depends heavily on jurisdiction and contract terms. A key point many businesses overlook: Force majeure is not always implied by law.
No Force Majeure clause? What is the position
When a contract or even a simple purchase order does not include a force majeure clause, the situation becomes legally complex.
Courts may instead rely on doctrines like:
- Frustration of contract
- Impossibility of performance
But these are narrow in scope while being difficult to prove and only applied in extreme situations This means that without a clear clause, businesses often have limited legal protection.
However, in reality, both parties are placed in a difficult position.
Without contractual protection, the affected party must rely on general legal principles which are uncertain and often unfavorable.
Source: https://www.hilldickinson.com/our-view/articles/no-force-majeure-clause-what-is-the-position/
Process of invoking Force Majeure in a business
Force majeure is typically invoked when a business cannot meet its obligations due to major external disruption. The process usually involves:
- Identifying the triggering event
- Reviewing the contract terms
- Notifying the other party formally
- Providing evidence of impact
- Attempting to mitigate the situation
If done incorrectly or too late the claim can be rejected.
Oil and Gas Force Majeure: A High-Risk Sector
The oil and gas industry is particularly sensitive to force majeure events. Operations often depend on stable geopolitical conditions & complex global logistics.
Even a single disruption such as conflict in a producing region can halt operations or delay major projects.
This is why oil and gas force majeure clauses are usually more detailed and heavily negotiated than in other industries.
Recent tensions and conflict in the Middle East have highlighted how quickly force majeure situations can arise.
These events have forced companies to revisit contracts, invoke force majeure, and renegotiate timelines.
In many cases, the real challenge has not been the disruption itself but whether the contract adequately covered it.
Real World Example:
Qatar Energy declared force majeure on some of its long-term liquefied natural gas (LNG) supply contracts, including for customers in Italy, Belgium, South Korea and China.
This was due to the ongoing middle east conflict.
Iranian missile and drone strike across the Middle East have targeted oil and gas facilities while the strait of hormuz has been closed and isa critical Gulf waterway through which about one-fifth of the world’s oil and LNG supplies transit.
This has caused mounting concern as energy prices have soared.
Qatar’s 14 LNG trains, the equipment used to liquefy natural gas, and one of its two gas-to-liquids facilities were damaged in Iranian attacks.
The repairs will sideline 12.8 million tonnes of LNG production per year for three to five years.
Is there a Practical Solution?
The most effective way to manage force majeure risk is through contract design and preparation. Businesses should:
- Include a clear and detailed force majeure clause
- Define events such as war, regional conflict, and supply chain disruption
- Establish notification and mitigation requirements
- Allow flexibility for delays, suspension, or renegotiation
Equally important is proactive communication when disruption occurs. Early engagement can often prevent escalation into disputes.
Your Key Takeaway
Force majeure is no longer a theoretical legal concept it is a real and active risk factor in global business.
With increasing uncertainty driven by geopolitical tensions, especially in the Middle East in recent days, companies must rethink how they structure contracts and manage obligations.
A well-drafted force majeure clause can determine whether a disruption becomes a manageable delay or a costly legal dispute.
