Force Majeure - CIOB

Embed Size (px)

Citation preview

  • 8/14/2019 Force Majeure - CIOB

    1/18

    OCCASIONALAPERNo.21

    by P. E.HealeyBScBA MIOBAIQS

    Thispaper is basedon the author's entr! lo lhe 1979 an MutayLeslie Awards u/hich rras awatded the Btunze Medal i the ,oungfiembers' competition. The ews expressedn thispqper are those oflhe author and not necessarilthose of the Inslhule,

  • 8/14/2019 Force Majeure - CIOB

    2/18

    D E F I N I T I O N S

    Ab initioFrom the beginning.

    EjusdemgenerisuleThisrule is_hat generalwordswhich follow two or moreparticularwordsmustbe confined o ameaningof the same ind (ejusdem eneris) s he particularwords.(SeePowellv KemptonparkRacecourseCo.( Sgt) A.C. 143)

    ObiterdictaThereare wo typesof obiter dicta;G) A statementof law s regarded sobiter ifit is basedupon factswhich eitherwere noi foundto exist,or if found,wetenot found to be material. -

    O) A statement f lawwhich,although asecln the facts ound,does ot formthebasis fthedecision;or example, statementflaw in supportofa dissinting.udgerirent.- Obiterdictaare not of bindingauthority but haveonly pe$uasive uthority.

    Prirna acieOn the faceof it.

  • 8/14/2019 Force Majeure - CIOB

    3/18

    C O N T E N T S

    DEFINITIONS

    INTRODUCTION

    A D E F I N I T I O NOF F O R C EM A J E U R E

    Act of GodVis majorForcemajeure

    L I M I T A T I O N S F

    . . . l 0

    . . . l 0

    . . . l 0

    F O R C EM A J E U R E

    D E F I N I T I O N S F F O R C EM A J E U R E O R C L A U S E 3 ( a )O F T H E J C TS T A N D A R D O RMO F C O N T R A C T . . .

    A P P E N D I X. Extract from the GeneralContractof theGrain and SeedTrade Association

    Extract from the StandardTradeCustomsissuedby the BritishPaperMills

    Extract from the Contract and ContractRulesof the SugarAssociationof London

    A P P E N D I XI .

    APPENDIX II ,

    l 5

    t 7

    l 9

    2 0

    2 l

  • 8/14/2019 Force Majeure - CIOB

    4/18

    FORCE MAJEURE - An examination of which circumstances are included within Clause 23(a) of the JCTstandard fonh of contract

    McCardieJ in Lebeaupin v Clispin and Companlr stated;'This phrase'force majeure has been ntroduced intomany Englishcommercialcontracts within recentyears.It is employednot only with increasing requency, butwithout any attempt to define its meaningor any effortto co-ordinate he phrase o the other provisionsdfdocuments'.Clause23(a) of the Joint ContractsTdbunal's standardform of building contract (1963 edition) states;'Upon it becoming easonablyapparent hat the progressof the works is delayed, he Contractor shall orthwithgivewdtten notice of the causeof the delay to theArchitect, and if in the opinion of the Architect thecompletion of the works is likely to be, or has beendelayedbeyond the date for completion stated n theappendix to theseConditions or beyond any extendedtime previouslyfixed under either this clauseor clause33(1) (c) of theseconditions,(a) by force majeure,.......then the Architect shall as soonas he is able o estimatethe length of the delay beyond the date or time aforesaidmake n writing a fair and reasonable xtensionof timefor completion of the works. Providedalways hat theContractor shall useconstantly his best endeavoursopreventdelay and shall do all that may reasonablyberequired to the satisfactionof the Architect to proceedwith the works'.

    INTRODUCTIONThe caseo_fYrazuand Another v The Asbal ShippingCompany' appears o be the first reported caseconcerningforce majeure.Unfortunately, no references made n thiscase o the reason or its inclusion.Forcemajeure clauseswere ntroduced into Englishcommercialcontractsat the end of the nineteenth andbeginningof the twentieth centuriesand this is supportedby McCardieJ in Z ebeaupinv Richard Lrispin and &mpany'This phrase force majeure' has been ntroduced intorpany Englishcommercial contracts within recentyears',and bv:

    (")(b)

    The Grain and Feed Trade Associationwho state hata force majeureclause as been ncluded n theircontracts or the last eighty yean. (SeeAppendix I)The National Federation of Building TradesEmployerswho have raced ts inclusion n the Joint ContractsTribunal's (JCT) standard orm of building contract(known then and for some ime after as he RoyalInstitute of British Architects form of contract)back o 1909.Englishstatuteshave also ncluded force majeureand similarclauses, amely the Emplqyment ofwomen, Young Personsand ChildrensAct (1920)r and the Hours of Employment(Conventions) ct 1936q.In considering he reason or its introduction it is pertinentto turn to lhe czseof Bhckburn Bobbin Company Limitedv T ll Allen and SonsLimitecl5 which summarises heEnglish aw of contract in the early part of the twentiethcentury. Parts of McCardieJ'sjudgement are as ollows;'The original rule of English aw was clerir n itsinsistence hat where a party by his own contractcreatesa duty or chargeupon himself he is bound tomake t goodnotwithstanding ny accident yinevitable necessity, ecause e might haveprovidedagainst t by his contract;seeper curiamParadinevJaneb That principle wasapplied with full severityduring the eighteenthcentury . . . . . . . . . The firsttrue modification of the original rule wascreated,thinl, by the doctrine of commercial rustration'.The next true modification of the originalrule was inallyeffected by the decision n Taybr v. Caldwellt There hecontract was held dissolved y the destruction of its-subjectmatter. The doclrlne of Tayl.or v Caldwell was exletded byNicholl and Knight v Ashton Edridge and Company6 andstill more strikingly enlargedbv the Coronation cases fwhich Krell v Henry 9 is the mo st vivid example ln Krell vHenry the court held that although a collateralwasimportant, circumstancewas he basisof the contractbetween he parties,and that when the basisceasedtfollowed that the contract was dissolved'.

    I (1920) 1 KB114 at page719.z1 le04)20 TLR 1533SchedulePt.11 Article 4 'The provisionof Articles 2 and 3 (regardingprohibition of the right to work) shall not apply tothe nightwork of young personsbetween he ages f 16 and 18 years n cases f emergencies hich could not have beencontrolled or tbreseen,which are not of a periodicalcharacter,and which interfere with the normal working of the industri"alundertaking'.4schedulePt.l I Article 3 'The Limitsof hours prescribedn paras2, 3 and 4 of Article 2 (ie working hours) may be exceededand the interval prescribed n para 5 (ie restperiod) reduced,but only so far as may be necessaryo avoid serious nterferencewith the ordinary working of the undertaking.a) In the caseof accident,actualor threatened,or in the caseof urgent work to be done to machinery or plant, or in thecase f'force majuere', rb) In order to makegood the unforeseenabsence f one or more membersof a shift'.5 (1918) KB 540e(1647) Aleyt 267 ( 1 8 6 3 ) B & S 8 2 6 .8(1901) KB 1269( 1903) 2 KB 740. The contract was o hire rooms on PallMall to view the Cofonation processions f Edward V I 1. On June20th Henry agreed n writing to pay f,75 for the hire of the roomsfor two days,paying f,25 in advance.The writing did notmention the procession.The processiondid not take placedue to the King's illness,and Henry refused o pay the f50, and therefore, Krell took actionfor this amount. The Court of Appeal held that both partiesregarded he taking placeof the procession as he foundation ofthe contract.

  • 8/14/2019 Force Majeure - CIOB

    5/18

    This was he situation at the outbreak of the FiISt WorldWar. At this time tlGre wer a vast number of commercialcontractswhich containedno clauseswhatverprovidingfcr that event. Thesewere obviously basedon theassumption hat peacewould continue, neither partycontemplatingwar.10The difficulty encounteredby the courts was to decide owhich circumstanceshe exception of Krell v Henry colldbe applied;'I desire espectfully to add that in my opinion the Krell

    v Henry rule should not be unduly extended. t is onlyin exceptionalcases hat it can be safely applied'.It is submitted that it is against he backgroundof the stricttule of Paradinev fane, with the very limited exceptionsofthe extended rule of Krell v Henry, that suchclauses sforce majeurewere ntroduced into Englishcommercialcontracts.Without them, the sellergenerallywould be inbreachofhis contract with the buyer.A closerexamination of the doctrine of frustrationamplifies his situation, one in which certainty and usticemay be seen o conflict.This doctrine operates n three main situations;(a) Where here s superveningllegality between hetime of making and the time of completing thecontract.(b) Where he performanceofthe contract has becomeimpossible hrough the destruction of the subjectmatter, through the death of a party in the caseofa contract of se ice, and through temporary non-availability.(c) Where ater eventsdestroy somebasicassumptiononwhich the partieshave contracted.

    The doctrine,of frustration has elaxed he strict commonIaw of Paradine v Jane lhat a corLtracl s made to beperformed.On examination of the aboveexceptions, t can be seen hattheremay be an overlapwith those reasonswhich may becovercdby the concept offorce majeurc. For example, nDenny, Mott and Dickinson Limited v Fraser (JamesB) andCo. Limitedll the contract was held to be frustrated by theCofltrol of Timber (No. 4) Order 1939which made radingin timber illegal.In compadson, in tghtm and Staines Electricity CompanyLimited v Eghem UrbanDistrict Councl12, it was held thata Lighting Order of 1939 making the display of street ightsunlawful was due to an unavoidablecausewithin themeaningof the force majeureclause.Why then are orce majeureclausesntroduced intocontracts,when the occurrencemay have been coveredbythe common aw doctrine of frustration? There are twopossible easons,Firstly, courts are now very reluctant to hold that acontract hasbeen rustrated13.This is supportedby thefact that since he passing f the law Reform (FrustratedContracts)Act (1943) no cases f frustrution havebeenupheldby the courts.Secondly, s the effect of a frustratingcircumstancecomparedwith the effect of one reasonof force majeure.At common aw the frustrating event brings he contract toan end forthwith, but the contract s not void ab initio.Thus at common aw, dghts accruedbefore the event remainenforceable, ut rightsnot yet accruedare unenforceable.These ules havebeenmodified by Section 1 ofthe IrwReform FruslratedConlracts) ct (1943)14.

    l0Blackburn Bobbin & Co. Ltd. v T 14Allen & SonsLtcl (1918) 1 KB 540. 'But it cannot be that all such comracrsweredissolved y the eventsof August, 1914. The mere continuanceofpeace was not a condition of the contract. . .. . . Thedestructionof a stateof peace s not of itself a destructionof any specificset of factswithin D/e// v Henry rule.Nor can t bethat gravedifficulty on the part of a vendor n procurring the contract articleswill excusehim from the performanceofhisbargain. f such were the case, hen the decisionof the Houseof Lords in Tenants Lancashbe)v llilnn & Company(1917)A.C.495 with respect o the force majeure clause here n questionwould havebeenunnecessary,or the contract wouldhavebeen dissolvedby the basic changeof circumstances nd the principle of Metropolitan llater Board v Dick Kerr andCompany 1918)A.C. 119would haveapplied'.11(1944)AC 265t2( 944)AER 10713(1956)AC 696. Lord Radcliffe's udgemett in Davis ContrsctorsLtd v Farcham UDC.14'Sl (i) Wherea contract governedby English aw has become mpossibleof performanceor beenotherwise rustrated, andthe parties hereto have or tlnt reasonbeendischarged rom the further performanceof the contract, the following provisionsof this sectionshall,subject o the provisionsof section wo of this Act, have effect in relation thereto.Sl(ii) All sumspaid or payable o any pady in pursuanceof the contmct befoJe he time when the partieswere so discharged(in this Act referred to as the time of discharge')slnll, in the caseof sumsso paid, be recoverable iom him asmoneyreceivedby him for the use of the party by whom the sumswerepaid, and, n the caseof sumsso payable,ceaseo be sopayable:Provided hat, if the party to whom the sumswere so paid or payable ncurredexpenses efore the time of dischargen, or forthe purposeof, the performanceof the contract, the court may, if it considers t just to do so having egard o all thecircumstances f the case,allow him to retain or, as he casemay be, recover he whole or any palt of the sumsso paid orpayable,not beingan amount in excess f the expenses o ncuned.S1(iii) Wheteany party to the contract has,by reasonof anything done by any other party thereto in, or for the purposeof,the performanceof the contract, obtained a valuablebenefit (other than a payment of money to which the last foregoingsubsectionapplies)before the time of discharge, here shall be rqcoverablerom him the saidother party such sum (if any),not exceeding he valueof the saidbenefit to the party obtaining it, as he court considersust, having egard o all thecircumstances f the caseand, in particular, -(a) the amount of any expensesncurred before the time of discharge y the benefitted party in, or for the purposeof, theperformanceof the contract, including any sumspaid or payableby him to any other party in pursuanceof the contract andretainedor recoverable y that party under the last foregoingsection,and(b) the effect, in relation to the said benefit, of the circumstances ivingrise o the frustration of the contract.8

  • 8/14/2019 Force Majeure - CIOB

    6/18

    However, where the circumstance s one of force majeure;the resultant effect of this circumstancedependson thewording of the contract in which it is included.In many commercial contracts, t is both in the interestsofthe buyer and the seller hat the contractbe fulfilled, albeitdelayedby reasonof force majeurerJ.Thus it can be seenlr that the force majeure clauseoperatesto keep the contract alive, albeit in cedain casesor alimited period. This may favour either the buyer or theseller,or both.In the caseof a building contract, it makessenseeconomically o keep the contract alive. For, if the delayingoccurrencewould haveconstituted a frustrating event andthere was no force majeure claus, hen the buyer (client)would have o seekan altemative seller builder) tocomplete he works. This would cost him more money, andit is likely that the delaying event would effect the newbuilder in a similar way as t affected the original builder.Thus the client would be no better off.Alternatively, if the delaying occurrencewould not haveconstituted a frustrating event, hen the builder would,without the force majeurecla[se, have been n breach ofcontract by not completing on time. The client would,therefore,have o seekdamages gainst he builder.Because f the force majeure clause, he contmct is neitherfrustrated or breached.

    An extensionof time should be grantedcovering he timeof the delay, but with no moniesbeingpayable o eitherthe client or the builder: each side, herefore,bears tsown costs.Thus,at worst, a force majeureclauseprotectsthe party who otherwisewould haYebeen n default andtherefore iable, and at bestkeeps he contract alive whichmay otherwisehavebeenbreached,or possibly n cases ffrustration. dissolved.This is supported n t]necase f FairclDugh,Dodd and lonesLimited i i. H. vantol Limitedl6 .

    A DEFINITION OF FORCE MAJEUREIt Thonas Borthwick (Glasgow) Limited v Fauvre andFairclough Limited, per DonaldsonJ.17'The precisemeaning f this er m (that s. forcemajeure)has eluded he lawyers or years.Commercialmenhaveno doubt as o its meaning.Unfortunately, no twocommercialmen can be found to agreeupon the samemeaning,so perhaps n this as n so many other mattersthere is very little differencebetween he commercialand egal raternity'.A completedefinition of force majeurecannotbe given,therefore, because f the reasons iven n the caseaboveand as will be shown below, it will vary according o thecontext in which it is written.l8Further variations o the meaningof force majeure ndifferent contexts will operateby the applicationof theejusdemgeneris ule which will generally imit its use.Thesevariationsand limitations will be examined ater.What definition, therefore, can be put on force mdjeure?To investigate his learned exts and case aw are reviewedto determinewhat eventsare coveredby force majeure,At the end, a definition will put forward, solely n thecontext of clause23(a) of the JCT standard orm ofbuilding contract.Before pursuinga definition further, three termsneedto be distinguished,heseare:acts of God, vismajor andforce majeure.It will be seen hat the circumstances overedby the termforce majeuregenerally nclude the other two terms;however,actsof God and vis major may not include allcircumstances enerallycoveredby force majeure.Contracts,especiallyolder ones,sometimesncludedvlsmajor provisions,and more frequently, actsof God clauses,and therefore t is necessaryo distinguishbetweencircumstancesncluded by these wo terms and thosecoveredby the force majeureconcept.19

    i5In the British Paperand Board Trade Customs, he force majeureclauseallowsfor suspension f the contract. Where hedelay ends within one month after the stipulated delivery date, then the contract shall recommence.However, delay of longerthan one month allows either party to cancel he portion of the contract affectedby delay. Thus both partiesare offeredprotection under this clause. SeeAppendix II).Clause23 of the Joint Contracts Tribunal standard orm of Building Contract allows or extensionsof time to the contractperiod due to reasons f force majeure.Clause21 ofThe Grain and FeedTrude AssociationGeneralContract No. I provides or extensionsof time to the shippingpeiiod of one month due to the occurrenceof force majeureafter which the buyer hasan option to cancel,and if he doesnot take up the option, then the period is further extended by one month. If the shipment s then still prevented, hen thecontract shall be consideredvoid.It is interesting o note that although this clause avours he seller, t gives he buyer certainadvantages. e has he option tocancel,but more important, during the option period he can watch the market and only exercise he option to cancel f themarkt goesagainsthim;for example a fall in the price in the commodity he is buying.16(1955) I WLR 1302 ParkerLI in the Court of Appeal did not define force majeure'but merely stated he function of itand when it operates;Whetherviewed as a clausewhich extends he time for shipmentor as an exception clause, t is aclausewhich operates o preventwhat otherwisemight be a breach rom being a breach. Such a clausewould normally, at anyrate, not be construedas being operative,unless n its absence,he party protected would havebeen n breach.'17(1968)1 Lloyd Report 16.page28 .lSBritishElectricsl snd Associated ndustries v Pqtle! Pressings td. (1953) 1 WLR 280.

    'Forexample, a term of a contract'the usual orce majeureclauses o apply'has been void for uncertainty'.lgMatsoukisv Priestmnnand Company (1915) I KB 681 per BailhacheJ. 'A1 the same ime I cannot accept he argumentthat the words (force majeure)are nterchangeablewith vis major or act of God. I am not going to attempt to giveanydefinition of the words force majeure,but I am quite satisfied hat I ought to give hem more extensivemeaning han actof God or vis major. The difficulty is to say how much more extensive'.

  • 8/14/2019 Force Majeure - CIOB

    7/18

    ACT OF GODAn act of God excuses party under a contract frodlliability which that party would otherltise incurred.20Halsburys awsdefines ct of God as;'An extraordinaryoccurrenceor circumstancewhichcould not havebeen oreseenand which could not havebeenguardedagainst,or, more accurately,as an accidentdue to natural causes, irectly and exclusivelywithouthuman intervention, and which could not have beenavoidedby any amount of foresight and painsand carereasonablyo be expectedof the personsought o bemade iable for it, or who seeks o excusehimself onthe groundof it. The occurrenceneed not be unique,nor need t be one that happens or the first time, it isenough hat it is extraordinary, and suchas could notreasonablybe anticipated,The merefact that aphenomenonhashappenedonce, when it doesnotcarrywith it o r import anyprobabilityof a recurrence(when in other words, it doesnot imply any law fromwhich its recurrencecan be inferred) does not preventthat phenomenon rom beingan act of God. It must,however,be somethingoverwhelmingand not merelyan ordinary accidentalctcumstance and it must not

    arise rom the act of man'.Thus,an act of God is something otally beyond the powersofof human control. It must also be somethingwhich isextraordinary2l , outside the scopeof usual or normaloccurrences,which could not havebeen reasonablyforeseen, reventedor guardedagainst.22The occurrenceneednot be the fust time.23Examplesof occurrences eld to be an act of God are asfollows:a. Accidentb. Storm and tempestc. Earthquakesand other convulsionsof natured. Extraordinary flood or tide

    e. Lightningf. Unprecedentedrainfallg. Fire causedby lightningh. Extraordinary frosti. Extraordinary snowfallj. Deathk. LunacyExamplesof occurrences eld not to constitute an act ofGod are;a. Fogb. Ordinary fall of snowc. Fire not caused y lightningd. Gnawingby rats of a hole in a pipe of a ship throughwhich seawater came n damaging argo.Vis majorThe Dictionary of EnglishLaw definesvis major as'such aforceas t is practically mpossible o resist,ega storm, anearthquake, he actsof a largebody of men, etc. Thedoctrine ofvis major is that a person s not liable fordamagef it was directly caused y vismajor. Vis majorincludesmany things describedas he act of God.'Thus, the differencebetweenact of God and vis major isthat act of God is an event or accident due to naturalcauses, irectly and exclusivelywithout human intervention,whereas is major is an rresistable orce,which may or maynot be with human intervention.24Pdma facie, herefore, there may be ittle distinctionbetweenvis major and force majeure,Force majeureThe first case aw on this subject appearedat the beginningof the 20th century.25

    2lRiver WearCommissbn rt lUilliamAdamsonand others.(1877) 2 AC 743 per Lord CairnsLC. 'If a duty is cast upon anindividual by common aw, the act of God will excusehim from the performanceof that duty. No man is compelled o dothat which s mpossible'.2loakley I ThePortsmouthand Ryde Stam PacketCo. (1856) l1 Exch.618 per Martin B.'The Act ofGod meanssomethingoyerwhelmingand not merely an accidentalcircumstance'.22Pandorfv Hay'niltor (1886) 17 QBD 670 per l,ord EsherMR'I shall not now enter nto a discussionwhich at one time wasrather rife, as o what $r'ashe exactmeaningof the term of'act of God'. In the older, simplerdays havemyself neverhadany doubt but thafit did not mean he act of God in the ecclesiastical nd biblical sense, ccording o which almosteverything s said o be the act of God, but that in a mercantile senset meant an extraordinary circumstancewhich could notbe foreseen,and which could not be guardedagainst'.The proof requiredregarding he amount of protection which the person elying on an act of God clausemust afford was seenh Nugent v Smithby Mellish.'Ll at page441; 'I think, however, hat in order to prove that the causeof the losswas rresistible,it is not necessaryo prove that it was absolutely mpossible or the carrier o prevent t, but that it is sufficient to provethatby no reasonable recautionunder the circumstances ould it have beenprevented.per Cockburn C J 'In other words, all that can be required of the carrier s that he shall do all that is reasonablyandpractically possible o insure he safetyof the goods. f he usesall the known means o which prudent and experiencedcarriersordinarily have ecourse,he does all that can be reasonably equired of him; and if, under such circumstances, e isoverpoweredby storm or other naturalagency,he is within the rule which gives mmunity from the effects of such vis majoras he act of Cod'.23Nitro-Phosphatend OclhamsChemical.ManureCo v London & St. Katherine Docks Co. (1878) 9 ChD 503 per Fry J 'I donot think that the mere act that a phenomenonhashappenedonce, when it doesnot cafiy with it or import any probabilityof a recurrence when, i6 other words, it doesnot imply any law from which its recurence can be inferred - places hatphenomenonout of the operation of the rule of law with regard o the act of God. In order that the phenomenonshould fallwithin that rule is not . . . . necessaryhat it should be unique, that it should happen or the first time;it is enough hat i1 isextraordinary and such as could not reasonablybe antiiipated. . . . To say hat a thing could not reasonablyhave beenanticipated S o say that it is the act of Cod'.24Simmons v Noitb, (1831) 7 Bing 640. In this casewhich decided hat vis major includesact of God and Queen'senemies,Tundall C J stated Here, if the surfaceof the meadow had beendestroyedby the erruption of a moss,or enemieshad landedand dug it up, that would have been no waste,but'the act ofGod, or ofa hostile force, that vis major for which the defendantis not resoonsible'.25Yrazusnd Anothbr v The Astal Shippr'ngCo. (1904) TLR 153.'t 0

  • 8/14/2019 Force Majeure - CIOB

    8/18

    The leading case, f only that it summadses omeeventswhichma y fa l into tle conceptof forcemaieure.sLebeaupinv Richard Oispin and Complfljtzo whereMcCardieJ'approves' the statement rather than definition)of Goirond2Twhich is as follows;'force majeure.This term is usedwith reference o allcircumstancesndependentof the will of man, and whichit is not in his power to control, and such orce majeureis sufficient to justify the non execution of a contractThus war, inundations,epidemics,are cases f forcemajeure;ithasevenbeendecided hat a str ikeof work'men constitutesa caseof force maieure'.McCardie saidof this starement28;'This is a wide deflnition, but I think that it usefully,though loosely suggests ot only the phraseasusedonthe Continent, but also he meaningof the phraseasoften employed n Englishcontracts'.There s one comment to make on Goirond'sdefinition Hestates hat force majeure applies o events ndependentofthe will ofman- This at first suggestsactsof God'. However,he includes n his definition, wars andstrikes.Thesesituationsare certainly not independentof the will of man29,they are man made.Goirond'sdefinition can be distinguished,and this issupportedby subsequent ases26,n that the term forcemajeurecan be usdwith reference o circumstancesindependant o the will ofthe padies to the contract, andwhich is not in their power to control,Those cfucumstanceseld to be by reasonof force majeurewill now be examined.(a) Direct legislativeor administrative nterferencein Lebeaupinv Clispin,McCardieJ26 gavenumerousexamplesof what he coosidered o be force majeure;'Any direct legislativeor adminislrative nterferencewould,of course, omewithin the term;for example,an embargo'.

    A further case egardinggovemment nterference,which ismore nformative, is that of C CzamikowLimited v CentrdhHandlu ZsgranicznegoRolimpex'30 Lord Denningexaminedtwo situations:(t) Whereneither of the contractingpartieswas hegovernmentdepartmentconcemed;(ii) Where he defaultingpady was he govemmentorgovernmentdepartment,Lord Denningheld that in this case,neither of the partieswas he govemmentor governmentdepartment,and heldthat the failure to supply the sugarwas outside he seller'scont ro l .3o,3 lHowever,he statedobiter32 that if the sellerwas held to bea departmentof the govemment, hen it could not replyupon the clause.(b) Act of ParliamentOne step urther from govenment interference s legislativeeffects.In the caseof Egham and Staines Electricity CompanyLimited v Egham Urban District Councilr3 there weret}lree contractswhere the appellant companyagreed osupply electricity to the respondentcouncil for streetlighting purposes, ubject o clause15.34Everythingwent smoothly until the outbreak of war, andthe Lighting (Restrictions)Order 1939, the Lighting(Restrictions)Order (No. 2) 1939,and the Lighting(Restrictions) Order 1940,made he displayoflights int}le streetsunlawful, The respondentcouncil thereforeceasedo consume he greaterproportion of the current,hitherto suppliedby the appellantand thereforce educedhis payment.It was held that the inability of the company to light thelamps was due to an unavoidablecause ie lighting orders)within the meaningofthe force majeureclause.35

    26rL920) KB 715.27doniOND French commercial aw, 2nd edition. p854.'28Lebeaupinv Oispin. Q92A) 2KB 715.Mccardie J stated That learnedJudge' ie BailhacheJ i1 Matsoukisv Priestnan)'was,if I may respectfully say so, clearly right when he said hat the phrase force majeure'was not interchangeablewith'vis major' or 'the act of Cod'. It goesbeyond the latter phrases'.2gDuncanWallace,.N. Hudson's uildingcontracts. oth edition,p.359. Forcemajeure . . . . it covers widerclass f eventsthan act of God'.30(1978) AER 81.31Ibid p9l.'I cannot think they shouldbe made iable in that situation, when there was absolutelynothing they could do.They had doneeverything hatihe contract required hem to do. It was only the ban, that is the 'governmentinteryention'which prevented he shipment. It was a clear caseof force majeure'.32Ibid.p89.33(1944) AER 107.34lbid. 'L,astlyit is hereby agreed hat no default by the companyunder this agreement hall render he company liable indamagesf and so far as such default shall ariseor be occasioned y reasonof fire, frost, accident,strikes, ockouts, acomblnadonofworkmen or from any other unavoidablecauseover which the company has no control. Providedalways hatall paymentsunder this agreement y the council shall abate n the sameproportion as he supply shall be curtailedby reasonof any eventprovidedfor in this clause'.35Thiscases further supportedby case aw whereparties o contracts not containingforce majeure,or similar clauseswereheld not to be in breachwhere they have actedaccording o an Act of Parliament,enactedsubsequent 0 the making of thecontract.This was so held in Baily tt de Oespign! (1869) L R 4 Q B 180; on the principle ofthe maxim'lex non cogit adimpossibilia. ie the law does not recognise mpossible hings). In this caseThe l-ondon, Brighton and South Coast Railway '(new lines) Ait (1862) gavea railway company power to compulsorily purchase rom the defendant and build upon landwhich the defendant covenantednot to build on. The defendant covenantorwas held not to be liable to the plaintiffcovenanteeor breach of covenant1 1

  • 8/14/2019 Force Majeure - CIOB

    9/18

    (c) Breakdown of machineryln Matsoikis v Priestman the co.ntrcct provided for theconstruction of a boat to be deliveredon or before the28th February,1913,subject o a forcemajeure lause.36The construction of the boat was delayed or several easons,one of which was due.to a breakdown ofmachinery,Bailhache considered hat this camewithin the words forcemajeureas orce majeure cedainly coveredaccidents omachinery.This begs he questionofwhether force majeurewouldcoverbreakdown of machinery due to lack ofmaintenance,that is self-inducedbreakdown, or even fair, wear and tea/?It is inevitable hat machinery will break down at some imeduring its working life, whether it is maintained or not. Asarguedby the counsel or the plaintiff3T'Breakdownof machinery doesnot come within thewords force majeure.A breakdown ofmachinery is ausualoccurrenceand must havebeen aken into accountby the defendants n considering he length of time theywould require for the building of the steamer'.It seemshat this decision of Bailhache must be strictlylimited to breakdownscausedby accident.Unfortunately,the facts of the casedo not assist s hey do not state hecauseof the accident which made he machinery breakdown.(d) Accident or casualtyThis is a continuation from the reasonof breakdown ofmachinery hrough accident.Theseevents,which would have been held to fall withinthe meaningof force majeureare cited from the caseofYrazuandAnother v The Astral Shipping Company3Swhich includeda force majeureclause.39The vessel alled n at aport because he mastermiscalculated he quantity of coal which was needed ocomplete he journey, thus delaying he journey andcausinga deterioration n livestock. It was held by WaltonJ that an accidentor casualtywould amount to force majeure.However, unning short of coal due to the master'smistakedid not amount to an accidentbecause'theship and cargowere never n any actual and immediate danger',and wasnol. theref ore. orcemajeure.WaltonJ gavean example of accident;'I f the deficiencyof coalshad arisen rom someaccident,if for example, t had beennecessaryo jettison coals,think it would have been a caseof force majeure withinthe meaningof the clause'.The reasonof'casualty' was also ncluded in Goirond'sdefinition40;' . . . . thus. . . . ep idemics,re ausesf forcemajeure. . . 'which was approvedby McCardieJ in I ebeaupinv Cispin

    (e) Extraordinary bad weatherIn Matsoukis v Priestman, another rcason for the delay wasbad weather.Bailhache 41 held that;'The term force majeure,cannot, however, n any view,be extended o coverba dweather , . .Theseare the usual ncidents nterrupting work, and thedefendants,n making their contract, no doubt tookthem into account',Unfortunatly, the factsgiven n the casedo not statehowbad the weatherwas nor what type of bad weather t was.Thisdistinctionwa smadeby McCardie in LebeaupinCrisoin42'In the MatsoukiscaseBailhache seemed o have uledthat delaycausedby bad weatherwas not within theforce majeureclause.But he was here dealingwith theparticular facts,and I conceive hat normal bad weatheris one thing, whereasabnormal empest,storm or thelike, may be another hing and might well fall within theforce majeureclause'.Therefore, t is considered hat exceptionallybad weathermay fall within the words force majeure.This is alsosupportedby the sectioncovering he act of God. In thatcase, torm, tempest,an extraordinary fall of snow, and anextraordinaryfrost werc all held to be actsof God. As forcemajeure s deemed o be wider than act of God, suchcircumstances hould, herefore, fall within the meaningof force majeure.(f) Seizure of a shipIn the Turul43 upon the outbreak of war, an enemy shipwas seized n the port of New South Wales, er charts andpapers emovedand a watchmanplacedon board. Afterthis seizure,a proclamationwas madegrantingnemy shipsa period in which to depart.The master of the ship was notinformed by the proclamation,or otherwise, hat upon hisapplyingfor a pass he shipwould be put in a position toceparr.The Privy Council held that the ship was unable o leave'by circumstances eyond ts control' (force majeure)within the meaningof article 2 of the sixth HagueConvention.44

    . !

    36'If the saidsteamer s not deliveredentirely ready to purchaserat the abovementioned time, the builders hereby agree opay to the purchaser or liquidated damages, nd not by way of a penalty, the sum of fl0 sterling or eachday of delay nthe deduction of the price stipulated n this contract, being exceptedonly in the caseof force majeure,and/or strikes ofworkmen of the building yard where the vessel s being built, or the workshopswhere the machinery s being made,or atthe works where steel s being manufactured or the steameror any works of any sub-contractors'.3 7 ( 9 1 5 ) K B 6 8 1 .38DuncanWallace n Hudson'sbuilding contracts, 1Othedition.39lbid 'The vessel as iberty to deviate or the purposeof saving ife or property, but not to call at aoy port or ports beforelandingher livestock except in the caseof force majeure'.40GOIROND. French commercial aw. 2nd edition.4 l (1915)1 KB 681p68742(1920\ 2 KB 7 194 3 ( 1 9 1 9 )C 5 1 544'Parsuite de circonstances e force majeure,n'aurait pu quitter le port enemipendant e de lai vise a l'article precedent'(i.e.whether the ship because f reasonsof force majeurecould not have eft the enemyport dudng the period mentioned nthe precedingarticle).

  • 8/14/2019 Force Majeure - CIOB

    10/18

    (g) General dislocafion of the supplier's qusinessThe main reason oi:the delay n the caseMatsoukis vPreistmanwas ]r.e1912 universalcoal stdke. The workswhere the defendantobtained ts materials or other shipsit was building fell behind. As a result,the ship to be builtbefore the plaintiffs occupied he berth that was ntendedto be occupiedby the plaintiffs drip much longer than itotherwisewould havedone, and consequently, he plaintiffsboat was ate in being aid down, and threfore ate indelivery.BailhacheJ4s held that this delay did fall within thereasonablemeaningof force majeure.(h) WarMany commercialcontracts oday contain their ownprovisionagainst he outbreak of war, However, one casenwhich a force majeureclausewas ncluded but a warprovision id nol exist was n Zinc Corporotion Hirsch46War broke out, and the sellerclaimed suspension f thecontract.On the questionof whether the force majeure clause17included war, per SwifenEady L J47;'The term force majeureasused on the Continent ofEurope ncludeswar; CalvoDictionnaire de DroitInternational, force majeure Dalloz JuispuidenceGenerale, ome 24 page755 article force majeure'Goirond's French Commercial aw, 2nd edition page834. Whether the expressionhas he samemeaning nthis contract is another matter. but war is a causebeyond the control of either party preventingordelaying he carrying out of the agreement'.It is considered, herefore, hat war, unlessexpresslyexcluded or included for elsewheren the contract, would becoveredby the words force majeure.This is endorsedbyGoirond's48definition approvedby McCardieJ inLebequpinv Crispin4945 :It was not, however, the direct operation ofthis st ke which caused he damage.What did cause he damagewas thegeneraldislocation of the defendant'sbusiness nd the business f the manufacturersof steelplates,etc. in the north, and inthosecfucumstances, think I amjustified in saying hat did constitute a caseof force majeure.Of course, f I were to give hewords the full meaningattributed to them by the Belgian awyer there would be no doubt about the matter, but giving hema more restrictedmeaning think that the complete dislocation of businessn the north of Englandas a consequence f theuniversalcoal strike, which operated directly on the ship n turn for building previously o the plaintiffs steamer,and onlyindirectly on the plaintiffs steamer,did come within the reasonablemeaningof the words force majeure'.46(1916)1 KB 541 Clause 7 of the contract provided In the event of (inter alia) any sttike, suspension f labour, floods,fire, stoppageof water supply, act of God, force majeure,ot any causebeyond the control of either the selleror the buyerpreventingor delaying he carrying out of the contract 'then this agreement hall be suspended uring the continuanceof anyandeverysuch disability.47(1e16) KB 541 p554a8GOIROND. French commercial aw. 2nd edition.4e (1920 12 KB 7 9so'GOIROND.Frenchcommercialaw. 2nd edition.sr( 1920\ 2 KB 71952(1922)1 KB 43153Under he Hackaey Electric Lighting Order (1893), the council were bound to givea supply of energy o premisesn theirdistrict, subject o clause26 which provided; Wheneverthe undertakersmake default in supplying energy o any owner oroccupierof premises o whom tiey may be and arerequired o supply energyunder this Order they shall be liable to a penaltynot &ceeding forty shillings n respectof everysuch default for each day on which any suchdefault occurs . . provided . . .that in no cale shail any penalty b; inflicted in respectof any default if the court . . . shall be of opinion that such defaultwas causedby inevitableaccidentor force majeure . . 'Two of the iouncil's workmen refused o do the work required,because he wiring of Dore's househad beencarriedout bya man who was not a memberof a trade union; that if the council had dismissed hesemen the result would probably havebeen hat the Electrical TradesUnion would have causedall their members n the council'sservice o terminate theirengagments;hat if this had occurred t would havebeen difficult for the council to get other competentworkmen; and thatany interferencewith the council'sundertaking by the withdrawal of their workmen would haveseriouslyaffected the wholedistrict. The council contended hat they were not liable for the penalty under clause26, as any default on their part wascausedby circumstances mountingto force majeure.At the fiist hearing he Magistrateheld that the meaningof force majeureappliedonly to physicalor material constraintandthat although t had been held that the exprssionapplied o stdkes actually proceeding, o war, and to breakdown ofmachinery, t had neverbeen held to apply to fear, howeverreasonable, f the oonsequencesf threalenedactioo.5a(1960)AC 684 p690 (PrivyCouncil)

    'Thuswar., - . . arecases fforce majeure'(i) StrikesAgain,Goirond's definition50 of force majeureapprovedby McCardieJ in Z ebe(rupin Oispinsr, included strikesasa reasonl'. . . . . it has evenbeen decided hat a strike of workmenconstitutesa caseof force majeure'.It washeld, it Hackney Borough Codncil v DoreS2 that astrike would, if the circumstances llowed(ie therewerenotconstraintssuchas he ejusdemgenerisdoctrine), amount toforce rnajeure,but that reasonable pprehension f a strikedid not amount, in itself, to force majeure.53Thereare several venisheld by the courtsnot to fall underthe words of force majeure.Theseare as ollows:(r) Events which are within the confol of the partyrelying on force majeure.ln Hong-Guan and Company Limitecl v R lumabhoyqn d Sons imited De r ,ord Morrisof Borth-v-Cesl54'S o fa r as he clause ealswith forcemaj6ure tappears o be designed o protect the respondentsfrom liability in the event of their beingpreventedfrom performing the contract by circumstancesbeyond their control'.(ii) Thos eventswhich are common or usual events which

    can be expected o occur in industrySuch circumstances s employeesattending hefuneral of their shipyard manager,and employeesattending ootball matcheswere held not to be byreasonof force majeute r Matsoukis v Priestnanbecause sstatedby Bailhache .'Theseare usual ncidents nterrupting work, andthe defendants, n making their contract, nodoubt ook them nto account'.

    t\ t

  • 8/14/2019 Force Majeure - CIOB

    11/18

    (iii) Events which the parties are, or should be aware ofDrior to. or at the time of making the contractinlohn Batt and Company(I'Qndon Limited vBrooker, Dore and CompanyLimited, per AtkinsonJ55;' . . . . it seems o me perfectly plain that theclause ie foice majeure)did apply and thatperformancewas quite impossible rom causesover which the sellerhad no control, and I canseeno justification whatsoever,or thesuggestionhat they cannot rely upon thesecauses ecausehey ought to haveanticipatedthem and foreseen hem'.Atkinson J, however,said hat he would have akenthe oppositeview if there was evidence hat thesellerought to have anticipatedthe incidents.However, his may be limited by the strict wordsof the contract,Primafacie, eventswhich the party is, or shouldbe awareat the time of contract cannot be pleadedas orce majeure.However, f as n Readon SmithLine v Minister of Agriculture16 , it car,be shownthat both parties were awareof the fact, and theintention was hat the event could be relieduponas alling within the meaningof force majewe,then it shall so be.(iv) Price increaseAl increasen price of the commodity beingsold,or n themethod f t ranspor ta t ionr anyotherassociatedncreasewill not come within themeaningof force majeure'The reason or this is that the contract is stillcapableof being performed albeit at a higherpiceto the seller.In the caseof Tenants Lancashire Limited v C' S.llilson and CompanyS? -ord loreburn held58;'By hinderingdelivery s meant interposingobstacleswhich it would be really difficultto overcome. do not consider hat evenagreatriseof priceshindersdelivery.If that hadbeen ntended different languagewould havebeen used,and I cannot regardshortageof cashor inabil i ty o buy al a remunerative riceasacontingencybeyond the sellers ontrol' Theargument hat a man becomesexcused romperformanceof his contract when it becomes'commercially' impossible , . . seemso be adangerous ontention, which ought not beadmitted unless he partieshaveplainlycontractedo I hal efl'ect"This is also he implication from the case f Buntenand Lancaster Limited v Wiltshire Quality hoducts'9Limited 59 dnd Brauer and Compsny v JamesClark petSellers 6o'. . . the sellersadmitted . . . that they could haveshipped,declaredand tendered he contract

    goodswithin the contractual date f they(themselves) ad paid the minimum price.Onthis admission, he sellers annot, n my opinion,rely on force majeure.There s no prohibition,no physicalor legalprevention.The goodscould, therefore, havebeenexported'.(vi) Failure of the subject matter when other suppliersare availableln Bunten and Ldncsster v Wilts Quality hoductsLimited, the seller ailed to supply kerasundhazelnutkernelsas contracted or, The contractc contained a force majeureclause.61The sellerclaimed lnt he wasentitled to cancelthe contract by reasonof force majeure,becausethe annual crop producedwas approximately onethird below the average nnualproduction, whichresulted n a price increase.It washeld per McNair J62;'It is quite clearon the evidence hat there wasnot the slightestdifficulty for any buyer in theautumn of 1950(at the material time of deliyeryunder this contract) to buy goodsof the contractdescriptionprovidedhe wasprepared o pay themarket price for them. There s nothing to

    suggest o me that there s anything abnormalin the market fluctuations that took place n thiscase. therefore am quite unable to infer thatthe sellers' eason or failing to deliver was ailureof crop, or force majeure,or any matter of thatkind'.The circumstances xaminedabove llustratethose eventswhich the courts havebeemed orce majeureclausesocover, and also hose which do not constitute force majeure.Two overriding acton may be added o this;Firstly, althoughone or other of the aboveeventsmayoccur, t doesnot necessarilymean that the force majeureprovisionwill operate.For example, t may be possible ofulfill the contractualobligations n someother way, despitethe fact that the event has occuned. In other words, in orderfor such a plea o be successful,lte contract must beimpossible o carry out due to this event.This was highlighte d in Hackney Borough Council v Dorcper BransonJ63'In my view force majeure cannot be established yshowing hat the consequences f doing the act whichwould be sufferedby the persondying upon theclausewould be unpleasant, uoublesome r perhapsdisastrous.n order to succeed,he appellantsmustshow that what the statute ordered hem to do hasbecome mpossible;it is not enough or them to s4vthat it has become nconvenientor unpleasant or them

    to do it'.The second actor leadsdirectly from the first, namely thatthe party relying on the clausemust do all that is reasonablypossible o prevent the delay from occurdng.

    ss(1942) loyds istL R Vol 72,149,p157s6(t962) AER577s1(1917) C 49s58Ibid 510se(1951) LloydsRc p3060(19s2) AER497611-Thiscontracts subjecto theusual orcemajeure lausesf this countryandof the countryof originof thegoods.2. Notwithstandingnithingaheady tated n this contract ellerseseruehe right o delaydelivery r shipment nd/brcancelwithout claimon eitherside hi unshipped nd/orundeliveredortion of this contractn theeventof their seller,failing o shipor deliver n account f stdke;,civil commotions, ar, civilwar, ailureof crops,orcemajeure tc,,and/orcontdbutorycauses.62(1951) LoydsRe p3263(1922) .KB 431p4381 4

  • 8/14/2019 Force Majeure - CIOB

    12/18

    This is established n the caseconcerningact of God, namelyNugent v Smith64 .There s one miscellaneous oint regardingcontractsincluding a force majeureclausewhich is of interest.A force majeureclause,on its proper constructionmay allowthe court to take account of the promisor'sobligationsunder other contracts despite he fact that, as a rule, it isno excuse hat contacts with third parties prevent thefulfilment of the contract in question.This was so held in Pool Shipping Company Limited vLond.on Coal Cornpany of Gibraltar Limited6S , wheretherewas a contract for the supply of steamercoal subjectto ;'In the event of any causeof circumstancebeyond thecontrol of the sellen and/or suppliersof whateverdescription. . . which prevents he supply, shipment,carriageor delivery of all , . . . coal herein contractedfor . . ., or the normal working of this contract, sellersorsuppliersshallbe entitled to relief from all obligationunder this contract,It was held that in construing he phrase normal workingof the contract', the court was entitled to look beyond thebuyer and sellerand consider he seller'scommitmentsunder contract with other buyers, and in the circumstances,the normal working of the contract wasprevented.In this case t was held that the defendantswere entitled,provided the shortagewas due to causes eyond theircontrol, to equalise he shortageof delivery amongall theircontracts.This is what is called he 'normal working of thecontract', and in the circumstances f the case. his normalway of carrying out the contract is held to be the couectmethod, and one which the defendantswere entitled toadopt.It is interesting o note that in the United Statesof America52-615of the Universal ommercial od e mposes n the

    seller he duty to allocatehis output amonghis purchasersin sucha manner as he may determine o be'fair andreasonable'.LIMITATIONS OF FORCE MAJEURXA further threepossible imitations additional to thosementioned n the previoussectionwill be discussed, amely:(a) Ejusdem generisruleIn many commercialstandard orm contractscircumstanceswhich are deemed o be force majeureunder that contractare often stated.Where his is the case, hen ary generalwords or othernonstatedcircumstances hich are claimed o constituteforce majeurewill be read,ejusdemgeneriswith thecircumstances hich are stated.66(b) Force majeure held void for uncertaintyThe caseof British Electrical (Cardiff) Limited v Patlq)LYessingsimited61 is one widely cited58 o illustrate thata term'the usual orce majeureclauses o apply' is void foruncertainty,It is considered hat this may be too liberal an nterpretationof the decision n the case.The terms of the contract inrelation to the saleof steel contained he following clause;'Subject to force majeureconditions that the lovernmentrestricts he export of the material at the time of delivery'.At the time of the contract, there was a variety of forcemajeureconditions n the trade, but there was not evidencethat any particularoneshad beenagreedupon.The plaintiff brought an action against he defendant orrepudiation of an agreement o sell steel.The defendantalleged hat the force majeureclausestatedabovewassouncertain as o render he contract unenforceable, incethere was n the trade, vadous orce majeureclauses ndno agreement ad been reachedbetween he partiesas owhich of such consitionsshould apply.

    r 6c(1876)1 CP D42 36s(1939) 2 AEF.43266M4tsoukkv hiestmqn. (1915) 1 KB 681. The exception clausegavean exceptionas orce majeure,and the other as . . . .strikes_ f workmen of the building yard where the vessels being built, or the workshopswhere the machinery s being made,or at the works where steel s being manufactured or the steamer,or any works of the sub-contractor'.One of the causes f delaywas the coal strike, which delayed he mamufacture f materials, hus delaying he construction ofthe boat beingbuilt in the berth which the plaintiffs boat would occupy.Per BailhacheJ at pages686, 687; 'I f it (ie the detention of the berths;f the previousbaot) had been the direct result of thecoal strike, there would havebeengreatdifficulty in saying hat ihe casecami within the exception clause,seeing hat certainstrikesare here particularly mentioned. It would have beendifficult to hold that another strike operatins directlv uDon hisshipought ro be added o the specific trikesmentioned n the clause'.In the Concadora 1916) 2 AC 1994 202, per l-ord Parmoor; I take it that a force majeureclauseshould be construed neachcasewith a closeattention to the wordswhich precedeor follow it, and with a due regard o the nature and generaltermsof the contract. The effect of the clausemay vary with each nstrument,.In Re An Arbitration Between he PodairTrading Company Limited; Bombay and FrancoisTagher, 1949) 2 KB 27 & 281,per Lord Goddard C J. 'In rule 53 force majeure s used n reference o 'timely fulfilment' of thi coniract and I should havethought that force majeure n that connectionmust be construedasbeing ejusdemgeneriswith the causes f delaypreviouslymentioned'.I-ordGoddard ontinued; t page286;'. . . and n our opinion he expressionorcemajeuremustalsobe construed ithregard o the-words hich precede r succeedt'.Finally in Fenwichand Schrnalz 1868) L R 3C p316, the contract provided for the defendant o load the plaintiffs shipwith coal n regular nd customary um. 'exceptin the crseof riots,itrikes,or any otheraccidents eyoncl is control' whichmight pre,vent r delay the loading.The defendantpleaded hat a snowstormprevinted loading.Held per Willes J; 'Wasthe snowstorm,however, an accidentbeyond the conirol' of the defen-dant, o doubt it was beyondhis control but was t an accident, think not, because n accident s not the sameas an occurrence,but is something hathappensout of the ordinary courseof things. A fall of snow s one of the ordinary operationsof nature, and is an incidentrather than an accident,and therefore, without going nto the rule that the generalwords are to be restricted o the samegenusas he specificwords which precede hem, I think this natural occuffencedid not come within the terms of the exceptionin the charter-party'.67(19s3)WLR 28068Halsbury'saw sof England, olume9. 3rd editionp322, ootnote 6: Benjamin Saleof Goods - page663, ootnote39 . ' 15

  • 8/14/2019 Force Majeure - CIOB

    13/18

    The court dgcidedon two counts;(i) M'cNairJ held69 that the words contained n theclauseprevented he court frcm holding that anyenforceablecontract was made.He held that thewords 'in the force majeureclause'made hesentence ovagueand uncertain to be capableofany precisemeaning.To(ii) In the secondplaceMcNair J71 considered hat theword 'condition' in force majeure conditions means'stipulations' or 'clauses'and not 'contingencies'or'circumstances'.Therefore,as here was n the trade a vadety of'forcemaieureconditions', and therefore fell within the lineof iuthorities of such cases sBishop and Boxter Limited vAnglo Eastem Trading and Industrial Company Limited12,where an agreementsubject to warplause' washeld by theCourt of Appeal to be not a completed agreementas hewar clause ook many forms, and as here was no evidencethat the partieshad any particular form of clause n mind,therewas no consensus d dem and therefore no completedconfiact. 1aIt is interesting o note however, hat McNair J - consideredthat had the word 'conditions' meant eitler 'contingencies'or 'circumstances'that the words/phrasemay not havebeentoo vague o be of contraciual effect. Nor did McNair Jaccept hat the further submissionby the defendants hatthe phrusewas too vague n the sense hat it did not statethe legal consequences hich would follow on proof offorce majeure, e whether there shouldbe cancellationordissolution.Thus, t appearsrom this udgement that the followingthree clauses re too vague,and therefore, not binding;Subject o forcemajeure onditions;Subject o force majeure stipulations;Subject to force majeureclauses;unless hose conditions, stipulationsol clauses an beascertained, ecause sMcNair J states;?4

    '. . , , no consensus d dem will be held to exist wherethere still remains o be negotiatedand agreed he exactform of the clauses r conditions refered to by theparties'.However, he following clauses re not too vagueand arethereforebinding;Subject o force majeurecontingencies;Subject o force majeurecircumstances; nd in additionMcNair J statesTsl'I am quite satisfied hat an agreementor salewhichwas otherwisepreciseand contained he phrase

    subjectto force majeure'would be a valid and enforceablecontract'.This begs hequestion. herefore. f *re definitionof forcemajeure,As discussed bove?6 there is no legally acceptabledefinition of force majeure.Therefore, f a clausesubjectto force majeure' s incorporated nto a contract, thenunless his is defined therein, or unless he circumstancenwhich force majeurearises s stipulated, hen partiesdo notknow what the clause ntendsexactly to cover;albeit theyhave a generalknowledgeperhaps rom decidedcases ndthe possible ntention from the particular contract.Does his mean, herefore, that unless here s an acceptable

    definition of force majeure hen there will be no consensusad dem between he parties?It is submittedtlat this is too generala mealing to derivefrom the decision n this case,and that this must be putinto the context of the case.The overriding actor in this case s that there were severalforce majeure conditions' in use n the trade at the time ofthe contract. The fact that this contract did not stipulateorimply which of theseconditionswas to be included meantthat the whole of the contract was oo vaguebecauseherewas no consensus d dem.Again, t can be seen hat the interpretation of the forcemajeureclause alls back onto the context in which it iswdtten. The dangerof interpretation lies where t is removedfrom tlis context,TT

    6e(19s3) WLR3 2837OG.Scsmmelland NephewLimited v Ouston.(1941) AC 241. McNair J in order to support his decisionquoted this case"atp255. 'In order to constitute a valid contract the parties must so express hemselveshat their meaningcanbe determinedwith a reasonable egreeof certainty'.71 bi d p2 8372n944\ KB t273(19s3)1 WRL 283 p285.74(19s3)1 WLR 28 3 p284rslbid p285't6ThomasBorthwick (Glaaow) Ltd. v Fauvre snd FaircloughLtd- (1968) 1 Lloyds Rep 16 p28. Per DonaldsonJ??Thiscasecan be contrastedwith Nicalene Limited v Simmonds, 1953) 1 AER 822; where there was a contract betweenthe sellerand the buyer. The buyer in a ltter offered to buy specificgoods rom the seller..The eller eplied n writing; 'Asyou havemade he order direct to me, I am unable o confirm on my usualprinted form which would have he usual orcemajeureand war clauses,lut I assumehat we are n agreementhat the usual conditionsof acceptance pply'.It washeld by Denning L J; at page826; 'in the casebifore the court therewas nothing yet to be agreed.There was nothingletl to furthei negotiate.The partiesmerelyagreed hat 'the usual conditions of acceptance pply'. That clausewas so vagueand uncertain as o be incapableof any precisemeaning. t is clearlyseverablerom the restof the contract, and can berejectedwithout impairing the sense f reasonablenessf the contract as a whole, and it should be so rejected'.Tire difficulty, therJfore,which arisesbetween he two cases,s when will a'vague' clausebe severablerom the main contract,and when will such a term make the contract void for uncertainty.This is a questionoutsidethe scopeof this paper,and one which the courts must answer acedv/ith individual cases'

    1 6

  • 8/14/2019 Force Majeure - CIOB

    14/18

    (c) Self inducementThe courts have irr y held that any self-inducedact,omissionor default on the part of the party seeking o beexcusedwill most certainly not fall into thoseeyentscoveredby force majeure.?8DEFINITION OF FORCE MAJEURE FOR CLAUSE 23(a)OF THE JCT STANDARD FORM OF CONTRACTNo exhaustivedefinition can be given o the concept offorce majeureas t differs, dependingon the facts ofindividual cases.The statement of Lord Denning n Stelmson, Jordan andHsrrison Limited v McDonald and Evans79 regarding thedefinition of a contract of servicen employment awcould usefully apply to the definition of force majeure;'Wasthe contract a contract of servicewithin themeaningwhich an ordinary personwould giveunderthe words . . . . t is alrnost mpossible o givea precisedefinitionof the disrinction.t is often easy o recognisea contractof sewicewhenyou see r but difficult tJsay wherein the difference ies'.It is easier o identi$/ a cfcumstance falling within themeaningof force majeure han to define it.Unfortunately, the term force majeurehas not receivedjudical interpretation in a case onceminga buildingconIIact.Therefore, he other judgements n commercialcasesmustbe used o provide an acceptabledefinition. This is bestdoneby meansof a check ist, as ollows;(a) The circumstancesalling within the conceptmust beindependentof the will of the contractingparties;(Lebeaupinv Oispin)8O(b) The circumstancesmust be outside he control of theparty relying on the force majeure clause;'HongGuan & Co. Ltcl. v R. Jumabhoy and SonsLimitedSlthe ConcacloroS2)(c) The circumstanceswill not include thosewhich are

    common or can be expected o occur in industry(Mqtsoukh v t iestman 83.

    (d ) The circumslancesii l nor include trosewhich thecontncting partiesare awareor shouldbe awareatthe time of making the conl1lact, Iohn Batt and Co.(London ) Limited v Brooker, Dore and Comryn1t s4,unless he intention by the partiesat the time ofcontractingwas hat theseshouldbe includedl(ReardotSmith Line v Minister of Agiculture, Farmsand Fisheries)85(e) Circumstances hich are self-induced y the partyrelying on the clausewill not amount to forci majeure,.^ (Simonsv NortonS6, Lebaupinv Oispin)B'l(0 The circumstances hich are claimed o constituteforce majeuremust make the contract impossible.and not merelymorediff icultor moreexpensiveocatry out (llalton v British Italian Trading Co.8B,. Hackney Borough Council v Dore)89G) The party relying on the force maieureclausemust doall rhat s reasonably ossibleo pievenr he delayftom occwring; (Nugent v Smith)90Havingestablishedhe genemlcriteria which must exist toproveforce majeureunderclause23(a), t is necessaryoexamine hosespecificcircumstances hich do, or wlichdo not. fall nto the definition n theclause.Clause 3 includes thergrounds or whichairextension ftime would be grantedby the architect,which if thev werenor separately tatedmay fal l under he cjause 3{aisub-clause.Theseare:(t Clause23(b) exceptionally nclementweather;(Matsoukis v biestmqn;83 Dixon v MetropolitanBoardof l4orks;91Blyth v BirminghamWarcrworksCo.e2 Briddon v GrcatNorth Railway Companyg3l(ii) Clause23(c) - lossor damage ccasioned y any oithe contingenciesefeued to in clause20(A), (ti) or. - (C); (Keighley'sssss94 {ugent v gmith)90(iii) Clause23 (d) - civil commotion. local combinationof workmen, strike or lockout, etci (LebequpinvCrispin9SHackneyBorough Councilv Dori)89.

    ?8Ia the^nineteenth entury case-ofSln mons v Norton, (1831) 7 Bing 640 at page649; Tindall C J Speakingof vis nEjor;It is sufficient, however, o say that the generalssueapplies only to iaseswherJ the act complainedof is not the act ofthe party;if it be the act of the party, he must admit and ustify it on record . . . . 'In Lebeaupinv Oispin per McCatdieJ (1920) 2I(B 714 & 721;' Aman cannot rely on his own act, or negligence r omissionor default as orce majeure'.This was alsoheld in the case f Ne\e Zealtnd Shippingv SocietedesArteliers, (1919) AClat 6;per Lord Finlay L C. .it is a.pdncipleof law that no one in sucha case akesadvantage f the existenceof a state of thingswhich he himseif produced. . .,And per Lord Atkinson, at page9; 'The applicationto contractssuchas heseof the principie that a man shallnot bepemitted to take advantage fhis own wrong, thus necessarilyeaveso the blameless uri un option *frether he will arwill not insist on the stipulation that the contract shallbe voii on the happeningof the namedeu'"nt. o o"priv" t im of thatoption would be but to effectuate he purposeof the blameableparty'.The sameapproach o self nducementhas been ollowed by theiouits regarding he doctrine of frustration.rtrMaitime National Fish Limited v ocean rluwlers Limitia,lozsl lciz+;Iird wright said; The essence f .frustration'is that it shouldnot be due to the act or election of the oartv'.Therefore, t can be seen hat the common law approach s t-hesameas iat adopted n force majeurecases,which is summedup in Goirond'sdefinition, (French commercial law 2nd edition, p854) where e states hat irrl ,"r- i"r". r"",.ure is a termusedwith reference o all circumstances . . . ,not within his (man,i) power to control'.7e.(1953)1 TLR 10 1 8s (1959) | I_{'yds 2380 1920) K8716 Bs es22) | KB 43 181 1960)AC 684 e0 1876i KB s3l82 1916)2 C r99 er(1881)7 QBD4I883 1915) KB 681 e2 1856) l Exch 8184 1942) loyds is tLR Vol. 72. 149 e3 1858) 8 LJE' 5l8s 1962)1 QB4286 1931) Bins640 e4 1609)10CoRe p13987 1920) KB 71 6

    1 7

  • 8/14/2019 Force Majeure - CIOB

    15/18

    (iv) Clause23 (i -by the contractor's nability to securesuch abour, goodsand/or materialsas are essential ocarry out the work s. (Matsoukisv fuiestrnenS3)Thesecircumstanceswill not constitute force majeureunderclause23(a). Thus, f one of the abovesub-clauses asdeleted rom the contract (ie the contract specificallyallows or the deletion of all or part of sub-clause 3 O;then the intention of the contractingpartiesmust be thatthesecircumstances hallnot giverise to an extension oft ime.Therefore, f one or more of the sub-clausess struck out,this will not constitute a reasonby force majeure underclause23(a).This is because f the application of the ejusdemgeneris uleas discussed reviously.As statedbtl-ord Parmoor n the Concadoro96;'I take it that a force majeure Clause houldbe construedin eachcasewith a closeattention to the words whichprecedeor follow it, and with a dueregard o the natureand general erms of the contmct".And in Mottram Consultants v Benard Sunley and SonsLimited per *t4 6ros9?; (a casenot concernedwith theforce majeureprovisions)'Wherethe partiesuse a pdnted form and deletepafis ofit one can, n my opinion pay regard o what has beendeleted aspart of the surroundingcircumstancesn thelight ofwhich one must construewhat they have chosento leave n'.Therefore as statedabove,by striking out one of the sub-clausesrom the contract, it must be the intention of thecontractingparties hat the circumstancesncludedunderthe sub-clause hallnot constitute a ground for an extensionof time under clause23, and will not, therefore, fall underforce majeuresub-clause 3(a).This was he guidancegivenby the Royal Institution ofCharteredSurveyors Quantity SurveyorsPracticeandManagementCommittee)where delayswere caused obuilding contractsby the 1973174erctgy crisis.Statutoryrestrictionson the use of fuel and power causingdelaysorshortageso suppliesof goodsand materials n contractswhere clause23O (ii) was deleted.98Finally, sub-clause 3(d) coversdelaysby civil commotion,strikesetc., n specificcircumstances.Situationsmay wellarisewhere a delay may be causedby civil commotion,strikesetc., which do not fall into the specificclrcumstances.Therefore,will thesegrounds all under clause23(a) forcemajeure?Thereare t]vo possibleapproacheso th.isquestion;Firstly, it may be argued hat the force majeureclause23(a)is a''fall back' clause.That is to say hat clause23(a) is tobe read togetherwith, andnot independentlyof thefollowing sub-clauses.

    Thesesub-clauses,herefore,would be by exampleofoccurrences overedby the clause23(a), althoughstandingin their own right when used as a rcason or grantingextensionsof time.Therefore, f an occurrencedoesnot fall directly underclause23(b), (c), (d) or O, then it is not necessadlyprecluded rom reverting o clause23(a).h'or example,strikeswhich do not fall under caluse23(d)may fall within the meaningof force majeureunder clause23(a). This is supportedby Mastrandrea.99Secondly, t can be argued hat the intention of the partiesat the time of contractingmust havebeenonly to haveincludeddelaysdue to the strikesstated n clause23(d),otherwiseclause23(d) would not havebeen ncluded,andstrikes,etc., would have al1enunder clause23(a) - forcemaieure.Thii was mplied, albeit obiter dicta by Bailhache inMatsoukis -Priestmar100.However, n that samecase, hecourt held that the delaywas not the direct resultof thecoal stdke, but that the strike affected he production ofmaterialsby a supplierof the defendant,which delayedthe defendant n completing he shipbingconstructedpdor to the plaintiffs shiP.ihis therefoie, eneratly islocatedhe defendanr's usiness'which was due ndirectly to the coal stdke, and wasthereforecoveredby the force majeureclause'Thus, tdeDends urelvon the [actsofthe casewhelherslrikes.civi lcommotion, tc.,no t covered y clause 3(d)will fallunder23(a).Thereappear, herefore,to be very few circumstancescoveredby clause23(a).Suchwould include,war,sovernment/administrativentervention, Act of Parliamenticcident or casualty eg epidemics)and possibly strikes,lockouts. etc.,not directly affectingthe works'However,as -ord Denningsaidabovewhen referringtocontractsof se ice, t is easier o recognise circumstanceof force majeurewhen you see t than to give a preclsedefinition.One inal requirementof clause23 is thaU'Upon it 6ecomingreasonablyapparent hat the progressofihe works is deiayed, he contractor shal forthwithgivewritten notice of the causeof the delay to thea r c h i t e c t . . . . 'Therefore, f the contractor fails to comply with this timelimit, his dght to an extensionof time will be lost' This wasiiifri"a'n rno*as Borthwick v Fauvte and Faircloughlorwhereclause19 provided that notice of the likely delaydueto 'force majeuri' must be given by the shippers o their ^ -buyerswithin 7 daysof the occufience,or not less han 21daysbefore the commencementof the contract period,whichever as he ater.This procedurewas not followed by the shipper,and hadthe delaybeenheld to be a circumstance overedby forcemaieure. hen the sellerwould havebeenprevented romrelying on clause19 for failure to comply with thisrequlremenr.

    qs (1920) KB 716e6(1916)2 AC r99e7 (L974)2BI-R3gSEnergyCrisis.Statutory restrictionson the useof fuel and power. CharteredSurveyor 1914 April, p267

    I Mastrandrea,F. An example- force majeure' QSWeekly 1977 September'p4'10 0 1915) I KB 681.pp686-68?.Wa sthe detentionof the berths n thosecircumstancescase f forcemajeure. f it hadbeen the direct result of the coal strike there woulC havebeengreatdifficulty in saying hat the casecamewithin theexceptionsclause,seeing hat certain strikesare there particularly mentioned. It would havebeen difficult to hold thatanotherstrike operating directly upon this ship ought to be added o the specificstrikesmentioned in this clause'.101 1968) 1 LloydsRep 16.1 8

  • 8/14/2019 Force Majeure - CIOB

    16/18

    APPENDIXEXTRACTFROMTHE GENERALCONTRACTOF THEGRAINAND FEEDTRADEASSOCIATION

    PROHIBITION-I0 caseof prohibition of export, blockade or hostilities or in case of any executive or legislative act done by o! on behalf of thegovernmetrt of the country of origin or of the terdtory where the port or porfs of shipment named herein is/are situat, restricting export, wbetherpartially or othrwise, any such restristion shall be deeried by both parties to apply to this conuact and to the extent of such total o! paitial restrictioDto prevent ulfilmeat whether by shipmentor by aoy other meaqswhatsoever od !o that extent his coDtractor aDy uDfulflled portion thereofshall becancelled. Sellersshall advisc Buyerswithout delaywith the rasons herefor and, if requiled, Sellersmust produceproof to justify the carcellatioD.FORCE MAJEURE, STRIKES ETc.-Sellers shall not be rcsponsible for dclay in $hipmeDtof the goods or any part thercof occasioned by any Aclof God, strike, lockout, riot or civil commotion, combination of workmcn, breakdown of machiftf,y, 6rc or any crusc comprehended in the terrn'forcemajeule'. If delay in shipment is likely to occur for any of the above rcasoDs,Shippcrs shall giv notic to their Buyers by telegram, telex or teleprinteror by similar advice withio 7 coDscltive days of the o@urrencc, or not lcss han 2l coEecutive days beforc the coomencemcnt of the contract period,whichever is late!. The notice shall state the tcasod(s) for the anticipated delay, If after giviDS such notice an cxtcotion to the shipping period is.cquircd, then Sh.ippersshall givc furthcr troticr not late! than 2 days aftcr thc last day of the coDtract pcriod of shipmcDt stating the port or ports ofloading from which the goods were intended to be shippd, and shipments efectcd after the coutract period shall bc Iimited to the port or ports sonominated. If shipment be delayed for more thaIl oaa caleDdarmonth, Buyers shall have the option of caacdliDg the dlayed portion of the contract,such option to be exercised y Buyers giving notice o be re.eivcd by SellersDot later than the 6rst busincss ay after the additionalcalendarmonth.If &yers do not exercisc his option, such delayedportion shall bc automaticallyextcDded or a further periodof ooe month. If shipmentunder thiscl{use beprevented during the further one month's extcdsion, the contract shall be considered void. Buye.s shall have no claim against Sllers for delayor non-shipment under this clause, provided that Sellers shall havc supplied to Buyers, if required, satigfactory evidcnce justifyirg the delay or nod-fulfilmeot.NOTICES-Any Notics received aftcr 1600 hours o! a business day $hall b deemcd to have ben receivcd on the businesr day following. A Noticeto the Broker or Agent shall bc demcd a Notice uoder this CoDtract. All Notices givn undcr this Cont.acl shall be givcn by letter or by tele$am orby telex or by other method of rapid writteq communication. Itr qascof.sales all Notics shall be passedon without dlay by Buyers to their respGtive Sellersor vice versa-NON-BUSINESS DAYs-Saturdays, Sundays and thc ofncially rerognisd and/or lcgal holidays of the rqlpcctive countries and aDy days which ThcCrain & Feed Trade Association Ltd. may delaE a! NoD-Busin$ Days for spcifc purposes, shall be non-busioess days, Should the time limit fordoing any act o. giviog any notice expi.c oo a Non-Busitrcss Day, the time so limited shall be exteoded until the first busiress day thereafter.The pedod of shipment shall not b affected by this claus..DEFAULT-In default of fumlment of contract by cithcr party, the other, al his discretion, shall, after gividg notice by letter, telegxam, or telex, havethe right to sell or purchase as the casemay bc, agiainst hc defaulter aqd the defaulter shall rnake good the loss, if ady, oo such purchase or sale ondmaDd. If the party liable to pay be dissatisfed with thc p.ice of such sale or purchase or if the above right is Dot exercised aDd damages cannot bemutually agreed,any damages, ayabl. by the party in default shall be scttledby arbitlation. In the event of default by Sellersentitling Buyers odamages, uch damages hall be basedupon thc actual or estimatedvalue of the goodson date of default, to be fixed by arbitration unlessmutuallyagreed, and nothing contained in or implicd uDder this contract shall entitle Buyers to racover any damages o respect of loss of profit upon any SubContracts made by themslves or otheN unless the Arbitrators or Board of Appeal, haviog regard to aBy special circumstances, shall io their soleand absolute disctetior award such damages. In the event of default in shipment or delivery, damages, if any, shall be computed upo[ lhe meancontract quantity.Default may be declaredby Sellerat any timc after expiry ofthe contructperiod,and lhe default date shall then be the first business ay after the dateof Seller's advice to his Buyer. If default has not already bendeclared thed notwithstandidg the provisions stated in sub-clause b) of the AppropriationClause, if a notice of appropriation is not passedby the 10th consecutive day after the last day for approp atiod laid down in the cont.act, the Sellershall bc dcemed to bc in default and the default date shall theD be the 6rst business day thergafte!.CIRCLE-Where a Seller repurchases from his Buyr or frorn any subsequent Buyer the same goods or part thereof, a circle shall be consideredto exist as regards the particular goods so repurchased, and the provisions of the Default Clause shall not apply. (For the purpose of this Clausethe same goods shall mean goods of the same descdption, from the samecouDtry of origin, of the safte quality, and, where applicable, of the sameanalysis warratrty, for shipmedt to the same port(s) of destination duriDg the same pedod of shipme[t), Subject to the terms of the ProhibitionClause in the contract, if goods are not appropriated, or, having beeD appropdated documents are not presented, invoices based on the meancont.act qualtity shall be sttled betweea each Buyer aod his Sller in the circle by paymeDt by each Buyer to his Seller of the excessof the SlleGinvoice amount of the lowest invoice amount in the circle. Payment shall be due not later than 15 consecutivedays alter the last day forappropiatio!, or, should the circle not be ascertained efore the eipiry of this time, then paymentshall t'e due not tater han 15 consecutive aysafter the cilcle is ascertained. All Sellers and Buyers shall give every assistance o ascrtain the circle and when a circle shall have been ascertainedin accordance witb this Clause same shall be biDding on all parties to the circle. As between Buyers and Selle$ in the circle, the non-presentation of documents by each Slle! to his Buyer shall not be considercd a breach of contract. Should any party in the circle colnmit anyact comprehended id the Insolvency Clause of the contract, p.ior to the date of paymcnt being due as stated above the invoice amount for the goodscalculatedat the closing out price as provided for in the InsolvencyClause,shall be taken as the basis or settlement nslead of ihe lowest nvoicamount in the cifcle, and in this event, each Buyer shall make paymeDtto his Seller, or each Seller shall make payment to his Buyer, of thedifreredce betwen the closing out pdce aod his contract price as the case rnay be.INSOLVENCY-If before the fulfilment of this contract, itbe. party shall suspeDdpayincDt!, commit an act of bankruptcy, lotify any of his c.editoNthat he is unable t6 meet debts or that he has suspendedot that he is about to suspendpayment of his debts, coDvene, call or hold a meetiog of credi-tors, convene, all or hold a meeting o go into liquidation (other than for reconstructionor amalgarnation) r shall apply for an omcial moratorium,have a petition prescntcd for winding up, or shall have a Receive. appointed, lhe conract shall forthwith be closed, either at the market price thencurrent for similar gooda,or at the option of the other party, at a p c to be ascertained y re-purchase r re-sale,and the difrerencebtween hecontract pric. and the closing price shall be the arnount payable or receivable under this codtract.DOMrcILE-Buyers and Sellers agree that, for the purpos of procedings either legal or by arbitration, this Cotrtract shall be deemedto have beenmade in England, and to be performed there, any correspondence n reference to the ofer, th acceptance, he plac of payment, o. otherwise notwith-standing,and the Coufls of England or arbitralors appointed o EtrglaDd,as the casemay b, shall, except or the purposeof enforcing any awardmade n pusuance of thc arbitration clausehereoi have exclusiveurisdiction over all disputeswhich may arise udder lhis CoDtract. Such disputesshall be settldaccording o the law ofEngland, whatever he domicile, esideoce r placeof business fthe pa.lies o this Contract may be or become.Any party to this Contract residing or carrying on business elswhere than in Engladd or Wales, shall for the purpose of procediogs at law or ina.bitratiod be consideredas ordinarily resideoto. carrying on businessat the offces of Th Crain and Fecd Trade AssodiationLimited, aDd f inscotland, he shall be held to havcprorogatedursidiction againsthimself to the English Courts; or if in lreland to havesubmitted to the jurisdictionand to be bound by the decGionof the English Courts. The serviceof proccedings pon any such parry by leaviDg he sanreai $e omce of TheCrain aod Feed Trade AssociationLimited, together with the posting of a copy of such proceedings o his addressabroad, or in Scotland or inkeland, shall be deemedgood service, ny rule of law or equity to thc contrary Dotwithstaoding.ARBITRATION-cognrsant.(b) Neither party hereto,nor aoy personsclaiming under either of them, shall briog a|ly action or other legalproceedings gainst he other of themiD rcspectof any such dispute until such dispute shall firsl have been heardand determinedb) rhe arbitrators, umpire or Board of Appeal, as the casemay be, n accordancwith th. Arbitration Rules and it is expressly gledaod de.laled that rhe obtainiDgof ao award from the a.bitlators, umpire orBoard of Appeal, as the cas may be, shall b a condition p.ecedent o the right of either party hereto or of any persoa claiming uDdereither ofthem to bring any actiotr or othcr legalprLceedings gainst be other of them in tespectof any such dispute.

    (a) ADy disputearising out ofor under this Contrad shall be settledby arbitratioo in London in accordanc. with the Arbitratioo Rules No, 125.ofThe Grain and Feed Trade Associatio! Limited, suchRules orming pan of this Contract aod of which both parties hereto shall be deamed o be

    ULIS CLAUSE-ThC Unifom l-aw on Salesand the Uniform Law on Formatio.l to which effect s givcuby the Uniform Laws oD IntemationalSalesAct 1967,shall not apply to this contract.

    1 9

  • 8/14/2019 Force Majeure - CIOB

    17/18

    EXTRACTFROMTHE STANDARD RADECUSTOMSSSUED Y THEBRITTSH|APERMILLS

    STANDARD TRADE CUSTOMS SSUED BY THE BRITISHPA?ER MILLS

    GENERAL _ APPLYING TO ALL PAPER AND BOARD(Hereinafter Referred to as Paper)FORCE MAJEURE(a) Dehyed DeliveriesIn the eventof delivery y the Seller r acceptanoey theBuyerbeingwholly or partly prevented r interfered ithby act of God, hostilities,hreatof war, iot, strike, ockout,civil commolion, ire, drought, lood, restriction yGovernment r other competent uthority, shortfall nanticipated upplies i raw materinl, r by any of th efollowingcontingencieseyond he controlof thepartyaffected: nterruptionof transport, estru clion r damageof premises, lantor machinery, r lny othercauses hetl]erof similar haracter r not, beyond he controlof thepartyaffected ncluding, n the oase f th e Buyer, ruses ffectingthe Buyer's ustomer,he followingprovisions hallhuveeffect:(1 ) Th e party affected hallgive o thc otherpartyimmediate oticeof causc reven{ing r interferingwith delivery r ucceptxncend the cxlent o whiclldelivery r acceptarrces prevented r interl -ered itlian d (if possible)he problble durr{ionof the caLrseof prevention r intert-erence.(2 ) During he continulnceoI t lrecause f prevention rinterference, elivery l tlreurrlulili led ortiono1 'the contractshallb9 suspc|dcd r, tr tlle crseol xpartialprevention r interference,eduoed nli l lhecause hallhave eased () perlte.

    APPENDIXI

    (3) Immediately he cause f the preventionor interferencahasceased o operate, he party concerned hallgivenotice hereof o the otherparty,an dassoonaspracticable hereafterdelivery shall be resumed naccordance ith the ermsof the contract.(4 ) If a cause f prevention r interferencehallcontinuefor more than one calendarmonth after the stipulateddateof delivery itherparty may by notice n writingto the othercancel hat portionaffected y the delay.(5) Goodsdue o r deliverywithin on ecalendarmonlhorin the course f manufacture r in tnnsit at the imeofany noticeasaforesaid eing ivenby the Buyermustbe accepted y the Buyernotwithstandinguchnotice, rovided he Buyerhasbeenadvised y theSeller f the ntendedmaking ate.(b) lncreusedCbstsIn t he eventof increasesn costs f production f paper ndboa|dcuused y actof God,hostilities,hreatof war, iot,strikeor lock-out, he Seller hallnotify the Buyerof suchincreusen t l ie cost n respect f any unfilledportionof acontractand he Buyershallhave he optiol of agreeingopa y the extracostor clncell ing he remainder f thecontract.An y suchnotification hallbe sent n writingandunlesshe Buyerwithin seven orkingdaysof receivingthe Seller's otil-i0ationf irlcreasesos tshallby notice nwriting o the Seller efuse o pay such ncrersed ost ll eBuyershallbe deemed o have lected o irccept hereniLitrder f the contraot nd it shallbe e\ecutedrccordingly.

    20

  • 8/14/2019 Force Majeure - CIOB

    18/18

    A?PENDIXIIIEXTRACTFROM THE CONTRAqTAND CONTRACTRULESOF TIIE SUGARASSOCIATIONOF LONDON

    FORCE MAJEURE.C.I.F. Free Out & C. & F. Free Out Contralts.120. Wherc thc Contract spcifieS hc placc of origin of *fflf#thc sugar and, in thc casc of any othcr contract, oncc the titDf,.Seller has dcclaredan origin, thc following Rule shall applyto the origin so specifid or dcclarcd.SbouldGovernment ntcrvention, waf, striks, ebel.lion, insurrection,political or labour disturbances, ivil com-motion, fire, sfess of weather, act of God or any causeolForce Majeure (whether or not of like kind to those beforcmentioned)byond the Scllcr's control prcvent directly orindirecdy within thc shippingperiod specified n rhecontract(a) the supply o or deliveryat shippingport in wholeor in part of the sugarallocatedor to be allocatedby the Seller against the contract

    of(b) thc vcssclsdcclarcd or to bc declarcd fron load. ffifing tbc suglr and thc Sellcr or his sgcot bc rttD.c-e6tunablc to cngagc altcmativc similar frcight spaccto cnablc him to eftcct shipmcnt within thc con-tract pcriod thc Seller shall immcdiaiely sdviscthc Buycr (by crblc or t lcpdnter if abroad) ofsuch fact and thc quantity so sficctcd and thcshipping pcriod shrll bc cxtendcd by thirty days.Il thc Scllcr is prcvcntcd fmm advising immcdi-atcly through circumstancB bcyond his conuolhc shall notify the Buycr &r soon as possible. Ifthc shipmcni is still prcveoted b,y thc cod of thccxtndcd pcriod, thc Buyer shall havc thc optionof cancelling thc contract for thc affcctcdquartity or of taking dclivcry at thc contrrctpricc without claiming damagG as soon as thcsugarcan bc shippcd. Thc Buycr'sdccisionshallbc notified to thc Sbller (by cablc or tclcprintcr ilabroad) promptly rftcr rcccipt of the Scllcr'sadvicc. Should thc Buycr clcct not to canccl thccontract but shipmcnt of thc sugar in wholc orin part still remain impo&siblesirty days aftcrthc last shipping datc providcd for by thc con.tract, thc contractshall bc void for suchquantitywithout penaltypayablcor rcccivablc-

    . In all c.s6 whcrc the controct provides fordclivcry by instalments, ach instalmentshall bedeemcd a scparatc contract.Thc party to a contractclaiming ForccMajeurcshall, l requcstcdby thc othcr party submitsuchcvidcncc as may bc nccassaryto provc satisfac.torily thc cxistcncaof any causc of prcventionor delay claimcd undcr this Rulc.