Force Majeure Clauses: Lessons from Queensland’s Cyclonic Wake-Up Call

As many Queensland and New South Wales businesses (or national with outlets, customers or suppliers in these areas) still grapple with the fallout of the recent unexpected cyclonic weather, many realise the importance of having well-drafted “force majeure” clauses in their contracts.

Everyone impacted, if they haven’t already, should be getting out their contracts and checking for this and paying careful attention to the specific wording.

For those caught unprepared, this serves as a critical lesson on why these clauses should be a standard feature in agreements with suppliers and customers.

For start-ups to established national brands, this is crucial, as the right contractual protections can safeguard your business’s future when disruptions occur.

 So, what is a Force Majeure Clause?

A force majeure clause is a contractual provision that excuses a party from fulfilling all or certain of its obligations due to extraordinary events beyond their control, such as natural disasters, government actions, or pandemics. When triggered, it can potentially provide full or partial relief from liability for delays, non-performance, or additional costs arising from unforeseen circumstances. It may even allow you or the other party to terminate an agreement without liability (which may or may not be something you want).

Without this clause, businesses may be left legally and financially exposed (and potentially destroyed with directors and guarantors exposed) when disaster strikes.

 Can You Rely on Force Majeure for the Current Cyclonic Situation?

If your contracts contain a force majeure clause, whether you can rely on it will depend on the Specific Wording:

-       Definition: The clause must clearly cover the situations that will be regarded as being a “force majeure” event. Often the wording will include pandemics, natural disasters, extreme weather or similar disruptions. If your situation does not fall within the definition – you will likely be out of luck to rely upon it. So careful drafting of what is to be included is essential.

-       Steps, timeframes, notice requirements: A well drafted clause will clearly set out when you are able to rely upon the clause (it may not be immediate and may require a force majeure event to be existing for a minimum time period or have a two part benefit, the second benefit only after a further time period expires), and each of the steps that need to be met to get all or part of the benefit of the intention behind these clauses. You also want to ensure that the benefits don’t go too far i.e. you may not want to have a right or the other party to have a right to terminate your overall contract.

-       Obligations to Mitigate: Some clauses require parties to take reasonable steps to minimise the impact of the event before claiming relief or processes to take after, which you need to consider to get the benefit or not have to repay or be liable for the benefit later.

If your contracts lack a force majeure clause (or not a well-drafted one!), you may be exposed to legal risks, including potential liability for failing to meet contractual obligations or risk a supplier or customer cancelling on you and not giving you the chance to get back on track. This can impact supply chains, project deadlines, and financial commitments, creating major disruptions for businesses at all levels.

 Why This Cyclonic Event is a Wake-Up Call for Businesses

For businesses facing supply chain disruptions, project delays, or an inability to meet customer commitments, this event highlights why force majeure clauses are not just a legal formality but a business necessity. Without them, businesses may be left scrambling for legal arguments under doctrines like frustration, which can be harder to prove and more unpredictable in court.

Whether you are a start-up negotiating supplier contracts or a national business managing multiple agreements, ensuring force majeure clauses are in place can provide vital legal protection against unforeseen risks.

 How to Future-Proof Your Contracts

1. Review Existing Contracts: Ensure all key agreements include a force majeure clause that clearly defines covered events, including extreme weather events like cyclones.

2. Be Specific in Drafting: Vague language can lead to disputes. Clearly outline which events trigger the clause, when and what needs to happen before it can be relied upon, what exactly are the rights and benefits, and what obligations (such as notice periods or record keeping or mitigation) must be met.

3. Establish Notice and Compliance Procedures: Ensure your team knows the required steps to invoke force majeure properly, including documentation and timely communication.

4. Work with Legal Experts: A poorly drafted clause can be ineffective or even unenforceable. Seek legal advice to tailor clauses to your business’s risks and obligations.

 Final Thoughts: Don’t Wait for the Next Disaster

While it may be too late to invoke force majeure for the recent cyclone if your contracts don’t contain the right clauses, it’s not too late to ensure your business is protected for the future. Now is the time to review, update, and strengthen your contracts so that when the next unexpected event occurs, you have a clear legal pathway to manage the disruption.

If you are a business owner—whether a start-up or an established enterprise—we can help ensure your contracts provide the protection you need.

📞 Contact us today for a free initial Discovery Call to find out how we can review or draft force majeure clauses that safeguard your business operations and financial stability.

Please note that this is a general and brief update, it does not purport to be comprehensive legal advice of all information and/or relevant to your circumstances. Consequently, specific legal advice for each of your circumstances should be obtained first before taking or not taking any action with respect to this area.