FORCE MAJEURE IN EXPORTS TRADE

Force majeure is a French phrase which means superior force or overwhelming circumstances. It is also sometimes referred to as “acts of God” that is events that are beyond our natural control.

Most contracts contain the force majeure clause. This clause typically allows a party to the contract to temporarily suspend or permanently terminate the performance of its obligations under a contract because of the occurrence of a force majeure event without being liable for not fulfilling the contract.

Force majeure events include fire, flood, earthquake, war, riots, lightning, explosion, strikes, and state or governmental action which prevents a party from playing its part under the contract.

For an event to be considered force majeure, we have to be able to ascertain that;

– The event is external to the contract and the parties involved.

– The event was unforeseeable.

– The occurrence of the event was beyond the control of the party seeking to use force majeure as an excuse for non-performance.

In the very few days of 2020, we have witnessed some remarkable force majeure events around the world; bush fires in Australia, earthquakes in Puerto Rico, floods in Indonesia & Pakistan and severe storms & tornadoes in the US.

It becomes very critical to look over your contracts carefully to ascertain that it contains a force majeure clause and most importantly the provisions of the clause in the event of force majeure.