‘Force majeure’ provisions could help growers who are unable to meet their contractual obligations because of the weather, as Amy Peacey, partner and commercial lawyer with national law firm Clarke Willmott LLP, explains.
So far, 2024 has been the year of rain. For the UK, the 18 months to March 2024 ranks as the fourth wettest on record. The NFU has recently indicated that harvest prospects are predicted to be lower than average for many growers in England. Some businesses will be concerned that they will not be able to fulfil their contractual obligations as a result.
Expert lawyers as well as NFU representatives are warning cereal businesses, which are already enduring significant reductions in income, to stay informed about how any shortfalls will be addressed with buyers.
Most commercial contracts contain force majeure provisions which may help. The purpose of a force majeure clause is to excuse a party from performance of their contractual obligations following the occurrence of an event which is beyond that party’s reasonable control, such as adverse weather conditions. The force majeure event will either prevent or sometimes just hinder or delay the performance of the contractual obligation.
The scope, operation and effect of a force majeure clause will depend on the drafting of the clause. The clause will determine whether the agreement continues, is suspended or is terminated on the occurrence of the force majeure event.
Every contract will have its own definition of force majeure. Some definitions will include an exhaustive list of events and/or circumstances which are considered to be beyond a party’s reasonable control. These exhaustive lists may include reference to adverse weather and/or flooding. Other contracts may include a more general definition such as “any event or circumstance outside of the party’s reasonable control”.
Whether or not adverse weather conditions will be caught by the definition will be a matter of interpretation. The full terms of the contract, along with the circumstances of the situation, will need to be assessed to determine whether the grower can rely on the force majeure provisions or not.
Some force majeure clauses include a qualification that the event was not reasonably foreseeable or would have been impossible to plan for or avoid. The inclusion of this wording clearly affects the ability to rely on the clause.
A grower who is seeking to rely on the force majeure clause will need to show that the adverse weather is the cause of your failure to fulfil your contractual obligations.
If the contract is silent on force majeure, they will need to look to the other terms of the contract or to the common law to determine if there is an excuse for non-performance.
Any businesses concerned that they may be unable to fulfil contractual obligations as a result of the weather can contact Amy Peacey at amy.peacey@clarkewillmott.com She will be able to review contracts and the associated circumstances and advise accordingly.
