Force Majeure Isn't a Universal Excuse: One Sentence in the Contract Can Change the Whole Cost

A safety net with holes

Supply chain disruptions, border closures, natural disasters: a force majeure clause looks like a safety net. The problem is that it may cover less than business owners assume.

What it looks like in numbers (an imagined example)

Imagine that the fixed monthly costs of your business (warehouse rent, salaries, guarantee fee) are €15,000, and that a force majeure event lasts five months and interrupts deliveries.

If the contract has no right to terminate, you still bear €75,000 of fixed costs with no revenue. If the contract gives a right to terminate after 90 days (three months), the cost is €45,000. The difference is €30,000 and depends on a single sentence in the contract.

For your own case, take the figures from your fixed costs.

An open or a closed definition of force majeure

Some contracts list exactly which events count as force majeure, others give a general definition with examples. The difference is large. With a closed list, an event that is not on it usually covers nothing, so a pandemic, a cyberattack or a raw-material shortage may fall outside protection if the contract does not name it. An open definition can cover more, but it is also more often the subject of a dispute, because the other side may argue the event was foreseeable or that you could have avoided it.

It is not enough that the contract says "force majeure" either. What matters is who has to prove that the event occurred, and whether it counts when an event only makes performance more expensive rather than impossible (a sudden jump in freight rates, for example). The contract should answer these questions explicitly, because they are hard to add later.

Questions to Check Before Signing

These are not ready-made contract clauses or legal advice, but questions worth thinking about before you accept the terms. The exact wording depends on your contract and the applicable rules.

Is the force majeure definition open-ended or does it just list events?

Are a pandemic, a cyberattack, a raw-material shortage or a border closure expressly mentioned?

By when and how must you notify the other side (in writing, to which address)?

What are the effects on contractual obligations (quotas, stock, guarantees) while force majeure lasts?

After how many days can you terminate the contract without penalty?

If you are not sure what your force majeure clause really covers, describe your contract and fixed costs to us. You will get a report on risks and options, without legal interpretation.

If the event happens: first steps

Even a good clause only helps if you use it properly. When an event happens, it helps to work in this order:

1. Check the notice deadline and send the notice the way the contract requires, even if you do not yet know how long the event will last.

2. Keep the evidence: letters from the supplier, decisions by authorities, carrier confirmations, photographs.

3. Work out what each month of disruption costs you (fixed costs with no revenue, as in the example above), so you can see when termination becomes an option.

4. Talk to the other side about a temporary arrangement, such as postponing obligations or partial deliveries, before the dispute hardens.

This is a business order of thinking, not legal guidance. Check your own contract with a lawyer.

Prepare questions before making a binding decision

Expert Consilium helps you examine business assumptions, risks and options before you make a decision. A business analysis of the terms shows what they mean for price, risk and flexibility.

Contact us: office@expertconsilium.com | expertconsilium.com

Informational business article. It does not constitute legal, tax, accounting, investment or other regulated advice.