MAY THE FORCE BE WITH YOU: THE OBLIGATION TO MITIGATE UNDER TYPICAL FORCE MAJEURE CLAUSES
The coronavirus (COVID-19) pandemic is having an unprecedented impact on global trade and commerce. One industry that has been particularly affected by the pandemic is the construction sector. Many principals and contractors are considering what contractual relief may be available under various project documents. Often that relief is in the form of a force majeure provision.
In order to obtain relief under a force majeure provision, a party will have to demonstrate the event falls within the clause and the operative parts of the clause are satisfied. Typically, the operative parts of the clause include an obligation to mitigate the effects of the force majeure event. The lengths a party has to go to in order to satisfy the mitigation obligations depends on the contract wording.
There are several types of force majeure clauses typically seen in construction and supply contracts with varying standards of mitigation obligations. In this article we consider, under English law, this spectrum of mitigation obligations in more detail.
Setting the standard: the spectrum of mitigation obligations under force majeure provisions
When assessing what is required to satisfy an obligation to mitigate the effects of a force majeure event, the precise wording of the clause is key. The wording will vary from contract to contract. However, in construction and supply contracts, force majeure clauses are typical.
Oct-Dec 2020 issue
Ashurst LLP