Anti-corruption / Corporate governance
ICC has updated its Force Majeure and Hardship clauses to help businesses large and small draft contracts adaptable to unforeseen events such as the COVID-19 outbreak.
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Commercial contracts often include Force Majeure or hardship clauses setting out requirements for establishing the existence of a Force Majeure or hardship event that prevents or impedes a party’s performance of its contractual duties. The ICC Force Majeure Clause combines the predictability of listed force majeure events with a general force majeure formula which is intended to catch circumstances which fall outside the listed events. The model Hardship Clause provides several options for amendment or termination of the contract when circumstances make performance of a contract untenable.
The ICC Force Majeure and Hardship Clauses balance business people’s legitimate expectations of performance with the reality that circumstances change, making performance so hard that the contracts simply must change. The new 2020 clauses update the 2003 versions, reflecting the need for simpler presentation and expanded options to suit various companies’ needs. Major innovations include a new Short Form Force Majeure Clause which is limited to some essential provisions covering the most important Force Majeure issues and is particularly suited to use by SMEs, and expanded options in the Hardship Clause for termination and adaptation of contracts.
The updated ICC Force Majeure and Hardship Clauses are balanced models for use in international contracts in any jurisdiction, created to help parties negotiate and draft contracts and increase legal certainty. They feature explanatory guidance notes throughout, giving users practical context and flagging issues to be considered when drafting such clauses.
The model clauses are intended to apply to any contract which incorporates them either expressly or by reference. While parties are encouraged to incorporate the Clauses into their contracts by its full name, it is anticipated that any reference in a contract to the ICC Force Majeure Clause will, in the absence of evidence to the contrary, be deemed to be a reference to this Clause.
