When force majeure isn’t enough

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Summary: As global disruption becomes increasingly common, businesses are reconsidering whether force majeure clauses provide enough protection. This article explores how geopolitical instability and supply chain pressures are reshaping commercial contracts. Alongside force majeure, businesses are increasingly using termination rights, price-adjustment mechanisms, alternative sourcing arrangements and detailed mitigation clauses to manage risk proactively, strengthen contractual resilience and maintain commercial certainty when unpredictable events disrupt performance or increase costs across global markets.

For decades, businesses designed supply chains around efficiency. Goods could be sourced and transported through established trade routes and delivered under predictable timescales. However, repeated disruptions, including the covid-19 pandemic and geopolitical conflicts such as the Russia/Ukraine conflict and instability in the Middle East, have challenged this model.

Businesses are increasingly accepting that uncertainty is no longer exceptional, but an ordinary feature of global commerce. To combat this issue, force majeure provisions are being given renewed attention and additional contractual mechanisms are being used not only to excuse non-performance, but also to manage disruption before it becomes a contractual dispute.

What’s a force majeure event?

A force majeure event is typically defined as an act, event or circumstance beyond the reasonable control of the parties that prevents, delays or hinders performance of contractual obligations.

Under English law, parties must expressly include a force majeure provision within their contract. Although often included as a boilerplate clause, these clauses must be clearly drafted and negotiated to ensure end-to-end client protection. While historically these clauses have been standardised, businesses are increasingly relying on them amid commercial uncertainty.

In the absence of a force majeure clause, non-performance will usually amount to a breach of contract, with the innocent party pursuing contractual remedies. Alternatively, the common law doctrine of frustration can apply in exceptional circumstances, although only when performance is rendered impossible, making it a considerably higher threshold to satisfy.

Globalisation and political instability

Recent global developments, such as the Riyadh airport attack, political unrest in France and disruptions in the Strait of Hormuz, are prominent examples of how political instability can have a knock-on effect on commercial certainty.

A key example is the global oil trade, with approximately 20 million barrels of oil per day passing through the Strait of Hormuz, representing around 20% of global petroleum. Disruption of this critical shipping route can trigger significant increases in oil prices, transportation costs and wider supply chain issues. For parties operating under contracts with fixed pricing, exclusivity restrictions or strict delivery timelines, these incidents can create significant commercial pressure such as increased costs, delayed performance and, in some cases, exposure to breach of contract. This is an example of an area where businesses can use contractual mechanisms, such as force majeure, to protect their ability to trade through uncertain times.

Although the global oil trade is one of the most striking illustrations of how these provisions take effect, smaller businesses that don’t partake in international trade can also face liability if these protections aren’t utilised.

When exceptional events start becoming commercial reality

Traditionally, force majeure clauses were designed to deal with rare and unforeseen events. However, businesses have now experienced multiple years of economic, political and logistical disruption. This raises an interesting issue: can businesses continue to treat geopolitical instability as unforeseeable?

Rather than asking ‘what happens if something goes wrong?’, businesses are asking ‘how can we shift the burden and limit liability when something inevitably goes wrong?’.

The shift has led to greater use of:

• stronger termination rights;
• price-adjustment mechanisms;
• alternative sourcing arrangements; and
• more detailed notice and mitigation clauses.

Each of these mechanisms serves a different purpose. Enhanced termination rights provide a clearer exit route when a contract becomes commercially unsustainable. Price-adjustment clauses allow parties to respond to increased costs arising from tariffs, supply chain disruption or inflation without forcing one party to absorb the entire economic burden. Alternative sourcing provisions can help maintain continuity of supply where a particular supplier, region or transport route becomes unavailable. Meanwhile, detailed notice and mitigation obligations encourage parties to identify issues at an early stage and take reasonable steps to minimise the impact of any disruption.

Unlike force majeure clauses, which are often triggered only after a disruptive event has occurred, these provisions enable businesses to manage risk proactively. By allocating responsibility for foreseeable disruption at the outset, parties can increase commercial certainty, reduce the scope for disputes and improve contractual resilience when market conditions change.

Commercial takeaways

The real question is no longer whether disruption will occur, but how businesses will respond when it does. As uncertainty becomes a permanent feature of global commerce, contracts are increasingly being used not just to govern performance, but to build resilience. Businesses that view contracting as a strategic risk-management exercise, rather than a legal formality, are likely to be better placed to navigate future periods of instability and maintain commercial certainty in an unpredictable world.

In answer to the question this article poses, force majeure provisions remain an imperative part of business continuity planning. Crucially, these clauses should be carefully negotiated to ensure end-to-end protection and used alongside other contractual mechanisms to proactively allocate risk when trading in uncertain times.

Benjamin Taberner is a trainee solicitor in the commercial and competition team at DWF Group Limited.