Who would have thought that we would be frequently negotiating the wording of the force majeure clause. In times of Covid-19, this has been a reality.
As the Spanish civil code provides, «no one shall be liable for events which could not have been foreseen, or which, having been foreseen, were unavoidable».
In the force majeure clause, we have been negotiating the inclusion or deletion of strikes, labour disputes, labour shortages, inability to obtain raw materials, transport problems. There have even been attempts to mix this question with the price increase of raw materials or transport. We should clarify that, while the above examples may be negotiated as force majeure, price increases are another issue that we will discuss later.
We are also still negotiating the inclusion of a paragraph in the force majeure clause concerning Covid-19 (and now also concerning the war in Ukraine). Basically, this paragraph means that the parties are aware of the current situation and it does not prevent the development and execution of the contract. It may also include that, if new circumstances arise regarding Covid-19, the parties will negotiate in good faith how to adapt themselves to those circumstances without delaying the project development.
In addition, it is not uncommon for one of the parties to request the inclusion of a ‘hardship’ clause. In the Anglo-Saxon world, this clause is much more widespread. For example, in a supply contract, the supplier will ask for the inclusion of the clause and will provide that, if an exceptional circumstance occurs which causes hardship for the supplier, the supplier can modify the prices in order to continue executing the contract. In many cases, it is often understood that in the event of an exceptional circumstance, the parties will negotiate in good faith alternative contractual terms to restore the rights and obligations assumed by them when they signed the contract.
In any case, we recommend including these clauses if the contract is subject to the laws of a country whithin the Romano-Germanic system. In case of subjecting the contract to the Common Law, this becomes absolutely indispensable.