Force Majeure Type Clauses

There are a number of contractual provisions, such as force majeure, hardship and price review clauses that are currently being examined by the courts, as corporates attempt to find ways of discharging their obligations from burdensome contracts.  For example, Australia's Fortescue Metals Group is relying on a force majeure clause in arbitration proceedings in London after it suspended all of its long-term shipping contracts as a result of the financial crisis, which it says triggered a sharp fall in Chinese steel production and consequently a collapse in iron ore demand.

The English courts have interpreted both force majeure and hardship clauses as being of the same category of clauses.  They are considered “boiler plate” clauses and have an effect of contracting out of the common law doctrine of frustration.  Although some jurisdictions vary in...

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