Force Majeure Clause: What It Covers and How to Invoke It

A force majeure clause excuses a party from performing a contract, and from liability for not performing, while an event beyond its control that it could not reasonably have foreseen or avoided prevents performance. What counts as force majeure, what notice is needed and what happens next are set first by the clause itself and then by the law that governs the contract, so the same event can excuse a party under one contract and not another.

What does a force majeure clause cover?

It covers events that prevent performance and that the affected party proves were beyond its control, not reasonably foreseeable when the contract was made, and impossible to avoid or overcome. The ICC Force Majeure Clause 2020 (para. 1) uses these three conditions, and the UNIDROIT Principles 2016 (Art. 7.1.7) and the CISG (Art. 79(1)) use almost the same test.

Most clauses add a list of events. The ICC clause presumes these events meet the first two conditions, so the affected party only has to show it could not avoid their effects (para. 3):

• war, hostilities, invasion, extensive military mobilisation;
• civil war, riot, insurrection, terrorism, sabotage or piracy;
• currency and trade restrictions, embargoes and sanctions;
• acts of authority, compliance with a law or government order, expropriation, requisition;
• plague, epidemic, natural disaster or extreme natural event;
• explosion, fire, destruction of equipment, prolonged breakdown of transport, telecommunications, information systems or energy;
• general labour disturbances such as strikes and lock-outs.

The ICC notes that parties can add or delete events, for example adding typhoons or earthquakes where the work is done, or removing acts of authority. A failure by your own subcontractor counts only if the subcontractor would also meet the test (ICC para. 2; CISG Art. 79(2)).

Force majeure vs hardship: what is the difference?

Force majeure applies when performance is prevented; hardship applies when performance is still possible but has become far more costly. The ICC puts it this way: force majeure relieves the party from performance, while hardship entitles it to renegotiate and, in some cases, to have the contract adapted.

	Force majeure	Hardship
Trigger	An impediment prevents or impedes performance	Events fundamentally alter the balance of the contract
Main effect	Performance and liability for damages suspended or excused	Request to renegotiate; adaptation or termination if talks fail
UNIDROIT Principles 2016	Art. 7.1.7	Arts. 6.2.1–6.2.3
ICC 2020 clauses	Force Majeure Clause (long and short forms)	Hardship Clause (adaptation or termination option)

Under the UNIDROIT Principles a party remains bound even when performance becomes more onerous (Art. 6.2.1). Hardship requires events that occur after the contract is made, could not reasonably have been taken into account, are beyond the party’s control, and whose risk the party did not assume (Art. 6.2.2). A request to renegotiate does not by itself allow the party to stop performing (Art. 6.2.3(2)). Higher costs, a weaker currency or a lost customer will rarely meet either test unless the contract says so.

How do you invoke a force majeure clause?

Follow the clause’s notice provision exactly and send notice as soon as you know of the event. Under the ICC clause, notice must be given “without delay”; if it is late, relief only takes effect from the time the notice reaches the other party (paras. 4–5). The UNIDROIT Principles (Art. 7.1.7(3)) and the CISG (Art. 79(4)) make the party that fails to give notice within a reasonable time liable for damages caused by the non-receipt.

A workable notice:

1. names the event and when it began;
2. identifies which obligations it affects and how;
3. explains why the effect could not reasonably be avoided or overcome;
4. gives the expected duration and the steps taken to limit the damage;
5. attaches evidence (official orders, port closures, utility outage notices).

After that, the affected party must take all reasonable measures to limit the effect (ICC para. 7) and must say when the impediment ends (para. 6).

What happens after force majeure is invoked?

The affected party is relieved from performing the affected obligations, and from damages, for as long as the impediment lasts. Under the ICC clause the other party may suspend its own related obligations from the date of the notice (para. 5), and either party may terminate if the impediment substantially deprives them of what they were entitled to expect; unless agreed otherwise, the ICC clause allows termination once the impediment lasts more than 120 days (para. 8). On termination, a party that has received a benefit pays its value to the other (para. 9).

Two limits often surprise people:

• Money is still owed. Neither the UNIDROIT Principles (Art. 7.1.7(4)) nor the CISG (Art. 79(5)) stops the other party from terminating, withholding performance or claiming interest on money due. Many clauses also exclude payment obligations expressly.
• The excuse is temporary. It lasts only while the impediment does (UNIDROIT Art. 7.1.7(2); CISG Art. 79(3)).

What if the contract has no force majeure clause?

Then the governing law decides, and the answer differs by country. The ICC notes that domestic doctrines such as frustration (English law), impossibility (civil-law systems) and impracticability (US law) “may imply substantial differences”, so the same circumstances may excuse a party in one system and not in another (ICC).

Governing law or instrument	Rule without a clause
CISG (international sales of goods; 97 parties per the UNCITRAL status page)	Art. 79: no liability for damages for a failure caused by an impediment beyond the party’s control that it could not reasonably have foreseen, avoided or overcome. Parties may exclude or vary the Convention (Art. 6).
Taiwan, Civil Code	Art. 225: the debtor is released if performance becomes impossible for a reason not imputable to it. Art. 227-2: after an unforeseeable change of circumstances that makes the original performance obviously unfair, a party may ask the court to increase or reduce performance or alter the obligation (Civil Code).
England and Wales	Frustration is a common-law doctrine; the Law Reform (Frustrated Contracts) Act 1943 (s.1) adjusts money paid and benefits received once a contract is frustrated, and the court gives effect to any contract term written for that situation (s.2(3)).
UNIDROIT Principles 2016	Apply when the parties choose them, and may be applied to fill gaps or interpret other law (Preamble); force majeure in Art. 7.1.7, hardship in Arts. 6.2.1–6.2.3.

Because these defaults are narrower and less predictable than a negotiated clause, cross-border contracts usually spell out force majeure, and often hardship, rather than leave them to the governing law.

What should you check in your force majeure clause?

Check that the clause fits your operations and your governing law before you sign:

• Definition and list. Does it follow the three-part test, and does the list include the events that matter where you operate (typhoons, earthquakes, sanctions, cyber incidents, energy outages)?
• Subcontractors. Is a supplier’s failure covered, and on what conditions?
• Notice. Is the deadline realistic, and what happens if notice is late?
• Payment. Are payment obligations excluded?
• Duration and exit. After how long can either party terminate, and what is paid for work already done?
• Hardship. Is there a separate hardship clause, and does it end in adaptation by a judge or arbitrator, or in termination?
• Interaction with the governing law. Does the law you chose add or remove remedies, such as the Taiwan Civil Code’s change-of-circumstances rule?

Our contract review reads the clause against your operations and the governing law. For the other clauses that do most of the work in a business contract, see the essential clauses every business contract needs.

Frequently asked questions

Can a pandemic be force majeure?

It can. The ICC clause lists “plague, epidemic” among presumed events. Whether an epidemic excuses a particular contract depends on the wording, on whether it was foreseeable when the contract was signed, and on whether its effects could have been avoided or overcome.

Does force majeure excuse late payment?

Usually not. Many clauses exclude payment obligations expressly, and under the UNIDROIT Principles and the CISG the other party keeps its right to interest and its other remedies apart from damages.

Can I use the ICC clause in my contract?

Yes. The ICC says its Long Form can be written into the contract or incorporated by reference (“The ICC Force Majeure Clause (Long Form) is incorporated in the present contract”), or used as the basis for a tailor-made clause (ICC 2020).