Short answer: a force majeure clause is an agreed allocation of risk, not a general right to walk away. Whether it covers a given event depends on its wording and on the law that governs the contract, and those differ widely. The ICC 2020 model clause, CISG Article 79 and the UNIDROIT Principles each excuse a party only when an event beyond its control, not reasonably foreseeable at signature, prevents or impedes performance and cannot reasonably be avoided or overcome. A cost increase alone usually does not meet that test, because performance is still possible, only dearer. If you want cost shocks shared, write an escalation or hardship clause before you sign. Check any draft with a lawyer qualified in the governing law.
An allocation you negotiate, not a right you have
The International Chamber of Commerce (ICC) notes that force majeure "is known by most legal systems, but the principles developed in national laws may imply substantial differences", which is why it publishes model clauses that parties can include in a contract or incorporate by reference ICC, Force Majeure and Hardship Clauses, March 2020. The 2020 set has a long-form force majeure clause, a short form described as "particularly suited to use by SMEs", and a hardship clause with options ICC, Force Majeure and Hardship Clauses page.
Three other texts show how differently the same idea can be framed:
- CISG, Article 79. Where the UN Convention on Contracts for the International Sale of Goods applies, a party is not liable for a failure to perform if it proves the failure was due to "an impediment beyond his control" that it could not reasonably have taken into account at signature or avoided or overcome UNCITRAL, CISG text. Article 79(5) keeps every other remedy except damages. The parties may exclude the Convention or vary its provisions (Article 6), and not every trading country is a party: the United Kingdom was not listed among the 97 parties when the status table was opened on 23 September 2026 UNCITRAL, CISG status.
- UNIDROIT Principles 2016, Article 7.1.7. Similar wording, applied when the parties agree that their contract be governed by the Principles UNIDROIT, Principles 2016.
- English law, one example. In RTI Ltd v MUR Shipping BV [2024] UKSC 18, the UK Supreme Court held that a force majeure clause under which an event qualified only if it could not be overcome by "reasonable endeavours" did not oblige the affected party to accept payment in euros instead of the contracted US dollars, absent express wording; "Clear words are needed to forego valuable contractual rights" UK Supreme Court, RTI v MUR Shipping, press summary. The case concerned one clause in a contract of affreightment under English law; it shows how closely wording is read, not a general rule elsewhere.
Rely on what the clause says, not on what "force majeure" means in general.
The five parts of an operable clause
A clause can be relied on when each part below is written down. The weak version is the one-line boilerplate many contracts carry.
| Part | Operable version | Weak version | Typical consequence |
|---|---|---|---|
| Events | Defined test plus a listed set | "Any cause beyond control" | Argument over whether the event counts |
| Test | Control, foreseeability, avoidability | No test | Each side reads it differently |
| Notice | Period, form, addressee, evidence | "Promptly inform" | Relief delayed or lost |
| Consequences | Suspension, extension, allocation | Silent | Unclear what is excused |
| Duration and exit | Day count, termination right | None | Contract held open indefinitely |
Defined events versus open-ended wording
The ICC long form combines both. Paragraph 1 sets a three-part test: the impediment is beyond the affected party's reasonable control, could not reasonably have been foreseen at signature, and its effects could not reasonably have been avoided or overcome. Paragraph 3 lists events presumed to meet the first two conditions, including war, sanctions and embargo, "act of authority", epidemic and natural disaster, "prolonged break-down of transport" and general labour disturbance. The affected party then only needs to prove the third condition ICC, Force Majeure and Hardship Clauses, March 2020.
A closed list is predictable but misses what nobody listed; open wording catches more but invites dispute. Two drafting points matter in commodity trade:
- Suppliers upstream. A trader's performance often depends on a mill or crusher. Under the ICC long form (paragraph 2), a party relying on a third party it engaged can invoke force majeure only if the test is met for both itself and that third party. CISG Article 79(2) takes a similar approach. A general shortage at your usual supplier may not qualify if another source exists.
- Named routes and ports. If the contract names a loading port or a route, say what happens when it closes: substitute, extend or suspend.
Notice mechanics: where many claims fail
A clause can apply in principle and still fail in practice because notice was late, informal or sent to the wrong person. The ICC long form requires notice "without delay"; if it is late, relief runs only from when the notice reaches the other party (paragraphs 4 and 5). Under CISG Article 79(4) and UNIDROIT Article 7.1.7(3), the party who fails to perform must give notice of the impediment and its effect on its ability to perform, and is liable for damages resulting from non-receipt if the notice does not arrive within a reasonable time.
Points a clause can address:
- Period: a number of days from when the party knew or ought to have known.
- Form: written, to a named address, with an agreed electronic channel.
- Content: the event, the obligations affected, expected duration and mitigation steps.
- Evidence: what supports the claim, for example an official notice or a carrier's advice, and when it follows.
- Updates: at intervals, and a notice when the event ends.
Confirm any change of notice address by a second channel; see payment redirection fraud in trade.
Consequences: suspension, extension, allocation and exit
The ICC long form relieves the affected party from performance and from damages while the impediment lasts (paragraphs 5 and 6), requires reasonable steps to limit its effect (paragraph 7), and allows either party to terminate if the impediment "substantially" deprives them of what they expected, adding that "Unless otherwise agreed", termination is possible if it lasts more than 120 days (paragraph 8). Paragraph 9 deals with benefits received before termination.
For a commodity term contract, also decide:
- Extension: how shipment periods move, and whether the buyer may cancel a delayed instalment instead.
- Allocation: if reduced output must be shared among several buyers, on what basis.
- Payment instruments: under a credit subject to UCP 600, the credit is "a separate transaction from the sale or other contract" and, subject to the transfer rules in article 38, cannot be amended without the agreement of the issuing bank, any confirming bank and the beneficiary ICC, UCP 600, articles 4 and 10. An extension agreed under the contract does not change the credit's dates by itself; see reading an LC before you accept it.
- Advance payments: what happens to a deposit if the contract ends; see advance payment: how much is reasonable.
Why a cost increase is usually not force majeure
Each reference text asks whether performance is prevented or impeded. A doubling of freight or of an input price makes performance more expensive, not impossible. The ICC hardship clause opens by saying a party "is bound to perform its contractual duties even if events have rendered performance more onerous than could reasonably have been anticipated", and UNIDROIT Article 6.2.1 says the same for its own rules UNIDROIT, Principles 2016.
If the goods could still be shipped, the cost usually sits where the price put it, unless the contract says otherwise. Some laws and clauses treat extreme cases differently; do not assume yours does.
Escalation, pass-through and index-linked clauses
An escalation clause changes the price by formula when a named cost moves. It does not excuse performance. US federal procurement rules describe three families of "economic price adjustment": against "published or otherwise established prices", against specified costs the contractor "actually experiences", and against cost "indexes that are specifically identified" acquisition.gov, FAR 16.203-1. They suit cases of "serious doubt concerning the stability of market or labor conditions" over an extended period, where the contingency can be identified and covered separately acquisition.gov, FAR 16.203-2. Those are US government contracting rules, not law for private sales, but the structures carry over.
A usable commodity escalation clause states:
- The component: freight, energy, a raw material or a currency, and its share of the price.
- The base: the value built into the price, with its date.
- The reference: a named published index or documented actual cost, and what happens if the index stops.
- Trigger and band: movement below a stated band is absorbed.
- Formula and cap: how much passes through, with any ceiling or floor.
- Direction: down as well as up.
- Timing and evidence: which shipment the change applies to, and what documents support it.
Pass-through of actual costs needs audit rights and invites argument over what "actual" means.
Hardship and renegotiation as the middle ground
A hardship clause sits between "perform at the agreed price" and "excused". Under the ICC hardship clause, a party that proves continued performance has become "excessively onerous" because of an event beyond its reasonable control that it could not reasonably have been expected to take into account, and that it could not reasonably avoid or overcome, triggers a duty on both parties to negotiate alternative terms within a reasonable time. If they fail, the parties choose in advance between option 3A (the invoking party may terminate), 3B (a judge or arbitrator may adapt or terminate) and 3C (a judge or arbitrator may declare termination) ICC, Force Majeure and Hardship Clauses, March 2020.
UNIDROIT Article 6.2.2 defines hardship as events that "fundamentally alter the equilibrium of the contract", including by an increase in the cost of performance, where the risk "was not assumed" by the disadvantaged party. A request to renegotiate "does not in itself entitle the disadvantaged party to withhold performance" (Article 6.2.3(2)).
Hardship suits shocks nobody could index; escalation suits costs you already know move.
Worked example: freight rises mid-contract
Hypothetical teaching example. Parties, figures and clause wording are invented; the outcome under any real contract depends on its wording and governing law.
A seller agrees to supply 12,000 tonnes of wheat flour: twelve monthly shipments of 1,000 tonnes at 400 CU per tonne, 4,800,000 CU in all. The seller books and pays the sea freight, which is built into the price at 45 CU per tonne. Its margin is 18 CU per tonne.
After four shipments, a route closure forces a longer voyage. Freight for the remaining eight shipments rises to 75 CU per tonne and transit lengthens.
What the force majeure clause reaches. The contract has the one-line clause. Vessels are still available on the longer route, so loading goes ahead. The route change raises cost; it does not prevent shipment. On that reading, force majeure does not help the seller. The longer transit may matter for arrival dates; whether that is a breach depends on the delivery term.
Without an escalation clause. The extra 30 CU per tonne turns an 18 CU margin into a loss of 12 CU per tonne: 96,000 CU over eight shipments, against 240,000 CU of extra freight.
With an escalation clause that passes through freight movement beyond a 10 percent band on the 45 CU base, capped at 25 CU per tonne:
| Line | CU per tonne |
|---|---|
| Freight increase | 30.0 |
| Band absorbed by seller (10% of 45) | 4.5 |
| Pass-through before cap | 25.5 |
| Pass-through after cap | 25.0 |
| Seller absorbs | 5.0 |
The buyer pays 425 CU per tonne, a 6.25 percent increase: 200,000 CU extra over eight shipments. The seller absorbs 40,000 CU and keeps a 13 CU margin. The buyer's worst case was known at signature: 25 CU on 12,000 tonnes, 300,000 CU.
The pre-signature checklist
- Name the governing law and forum, and ask a lawyer qualified in that law how it treats force majeure and hardship.
- Decide whether the CISG applies or is excluded.
- Replace boilerplate with a test, a list and the events that matter for this route and product.
- Cover suppliers upstream and named ports.
- Write notice period, form, addressee, content and evidence.
- Set suspension, extension, allocation and a termination day count.
- Align payment instruments and deposits with those consequences.
- List the cost components that move, and add an escalation formula for each one you will not absorb.
- Add a hardship clause, choosing the outcome if negotiation fails.
Common mistakes
- Treating force majeure as a legal doctrine that applies whatever the contract says.
- Invoking it for a price rise when performance is still possible.
- Sending notice late, informally or to the wrong address.
- Agreeing a contract extension but not amending the letter of credit.
- Writing an escalation clause that only moves the price up, or cites an index nobody can find.
Limits and what to recheck
This article compares named model texts opened on 23 September 2026: the ICC 2020 clauses, the UNIDROIT Principles 2016, the CISG, three UCP 600 articles, one English judgment and US federal procurement rules. It does not state the law of any country. Legal systems differ in whether and how they excuse performance or adjust a contract for changed circumstances; standard-form commodity contracts may carry their own clauses. Before signing or invoking a clause, confirm the governing law, any trade-association form in use and the current text of each rule with a lawyer. More in Contracts, Incoterms & Documents. This is general information about published model texts, not legal advice on any contract or law.
FAQ
What is a force majeure clause example in a sale contract? The ICC 2020 long form is a public model: a three-part test, a list of presumed events, notice without delay, relief while the impediment lasts, a duty to mitigate and a 120-day termination right unless otherwise agreed.
Does force majeure cover a price increase? Usually not on its own, because performance is still possible. Some laws and clauses treat extreme cases differently; check the wording and governing law.
What is a price escalation clause? A formula that changes the price when a named cost moves beyond an agreed band, measured against a stated base and reference, often with a cap.
What is a hardship clause? A clause that obliges the parties to renegotiate when performance becomes excessively onerous, and says what happens if they cannot agree.
Next step
Put the current contract's affected obligations, notice requirements and price-adjustment formula on one page. For each proposed change, identify the cost component, evidence, timing and treatment of decreases as well as increases; have your legal adviser check the wording before you agree it.
Resources
- International Chamber of Commerce — ICC Force Majeure and Hardship Clauses, March 2020 — https://iccwbo.org/wp-content/uploads/sites/3/2020/03/icc-forcemajeure-hardship-clauses-march2020.pdf (accessed 23 September 2026)
- International Chamber of Commerce — ICC Force Majeure and Hardship Clauses (page) — https://iccwbo.org/news-publications/icc-rules-guidelines/icc-force-majeure-and-hardship-clauses/ (accessed 23 September 2026)
- UNIDROIT — UNIDROIT Principles of International Commercial Contracts 2016, black-letter rules — https://www.unidroit.org/wp-content/uploads/2021/06/Unidroit-Principles-2016-English-bl.pdf (accessed 23 September 2026)
- UNCITRAL — United Nations Convention on Contracts for the International Sale of Goods, text — https://uncitral.un.org/sites/default/files/media-documents/uncitral/en/19-09951_e_ebook.pdf (accessed 23 September 2026)
- UNCITRAL — CISG status — https://uncitral.un.org/en/texts/salegoods/conventions/sale_of_goods/cisg/status (accessed 23 September 2026)
- International Chamber of Commerce — UCP 600, articles 4, 10 and 38 — https://library.iccwbo.org/content/tfb/RULES/tfb-ucp600-rules.htm?l1=ICC+Rules&l2=UCP+600&l3=Rules (accessed 23 September 2026)
- UK Supreme Court — RTI Ltd v MUR Shipping BV [2024] UKSC 18, press summary — https://supremecourt.uk/uploads/uksc_2022_0172_press_summary_c5f3a77b1a.pdf (accessed 23 September 2026)
- acquisition.gov — FAR 16.203-1, Description (economic price adjustment) — https://www.acquisition.gov/far/16.203-1 (accessed 23 September 2026)
- acquisition.gov — FAR 16.203-2, Application — https://www.acquisition.gov/far/16.203-2 (accessed 23 September 2026)
