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Govt Clarifies Force Majeure for Public Contracts
2 May
Summary
- Extraordinary events beyond human control suspend contract obligations.
- Suppliers must notify authorities within 14 days of events.
- Contracts can be terminated after 90 days of Force Majeure.
The Department of Expenditure has issued a clarifying memorandum on the Force Majeure Clause (FMC) within government procurement. This reaffirms how disruptions will be handled in public contracts, referencing existing provisions in several procurement manuals.
Force Majeure is defined as extraordinary, uncontrollable events like natural calamities or war, which can temporarily suspend contractual obligations. However, these events do not permanently excuse parties from their duties, only suspending performance for the event's duration.
Suppliers must provide timely notification, generally within 14 days, and cannot make retrospective claims. Crucially, if Force Majeure conditions continue for over 90 days, either the supplier or the contracting authority can terminate the contract without financial penalties.
This clarification ensures suppliers are not penalized for delays caused by Force Majeure events, even if contracts include punitive clauses for delays. The provisions apply reciprocally, covering situations where the purchasing organization itself is affected.
