Member Article

As we have previously commented, once COVID came along force majeure became, understandably, a hot topic but case law on the subject was light.  We are now however starting to see a trickle of cases emerging which consider force majeure.

In RTI Ltd v MUR Shipping BV however, the Supreme Court has now handed down a significant judgment that clarifies the rights and obligations of contracting parties under a force majeure clause ([2024] UKSC 18).

In this case the court established that parties wishing to invoke force majeure will generally first have to use reasonable endeavours to avoid or overcome the effect of the force majeure event. However, they are not obliged to accept an offer of non-contractual performance by a counterparty.

This means that there is no need for a party seeking to rely on a force majeure clause to accept a workaround proposed by the counterparty if the proposal would involve performance outside the terms of the contract. This is the case regardless of whether the proposal for alternative performance would achieve the same result as contractual performance and whether it would cause any detriment.

For those parties to contracts who may wish to rely on force majeure, most notably in relation to the delivery of goods and services, it is suggested that the key point is to understand what counts as “performance” under the contract and whether, in relation to new contracts, to expressly provide for “reasonable endeavours” to include the acceptance of an offer of non-contractual performance in defined circumstances. If this is the case then consideration should be given to how it might apply and whether additional limits, such as excluding particular obligations from its scope, should be specified.

Shoosmiths' supply chain & manufacturing team are well versed in all manner of supply chain contracting and have particular expertise in navigating the practicalities of force majeure provisions. We can assist you with any queries you may have.

 

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