Force Majeure Clauses: Examples And How To Use Them In Contracts

If you run a small business, you’ve probably had at least one moment where a deal looked solid on paper… and then the real world got in the way.

A supplier can’t deliver because a port shuts down. A venue becomes inaccessible due to flooding. A key subcontractor can’t work because of a government order. Suddenly, you’re asking: Are we still responsible for meeting the contract?

That’s where a force majeure clause often comes in. But it’s also one of the most misunderstood contract clauses we see in practice.

In this guide, we’ll break down what force majeure means, share clear force majeure example scenarios, and explain how to use force majeure clauses properly in Australian business contracts - so you can manage risk without damaging key relationships.

What Is Force Majeure (In Plain English)?

Force majeure is a contract concept that can excuse a party from performing their obligations (or allow delayed performance) when something outside their control happens and, under the wording of the contract, prevents them from performing (or triggers the contractual relief).

In everyday terms, it’s a “big unexpected event” clause. The key idea is that the event is:

• Outside the affected party’s reasonable control
• Not something they could reasonably prevent or avoid
• Actually impacts their ability to perform the contract (it’s not just inconvenient or more expensive)

In Australia, force majeure isn’t a free-standing legal right that automatically applies whenever there’s a crisis. It’s mostly a contractual mechanism.

That means whether force majeure applies (and what it lets you do) depends on:

• Whether your contract includes a force majeure clause
• How that clause is written
• The facts of what happened and how it affected performance

If you’re relying on business contracts heavily (suppliers, customers, partners), it’s worth having your agreement drafted or reviewed properly, whether it’s a bespoke Contract Review or an updated standard template for repeated use.

Force Majeure Vs “Frustration” (Why The Clause Still Matters)

Australian law does recognise the doctrine of frustration, which can sometimes end a contract if an unforeseen event makes it impossible to perform, or fundamentally changes what the parties agreed to.

But frustration is narrow and fact-specific, and it usually ends the contract entirely - which may not be what you want.

A well-drafted force majeure clause gives you a clear, practical process (like suspension, extensions of time, and termination rights after a defined period) rather than leaving you to argue about frustration later.

What Is Force Majeure Example? (Common Scenarios For Australian Businesses)

If you’re searching “what is force majeure example”, you’re usually trying to work out whether your situation fits the legal concept.

Here are common force majeure examples that often appear in Australian commercial contracts:

Natural Disasters

• Flooding that prevents access to premises, warehouses, or job sites
• Bushfires affecting production, deliveries, or utilities
• Cyclones and storms causing property damage or transport shutdowns

Government Actions Or Legal Restrictions

• Lockdowns, movement restrictions, or public health directions
• Government orders shutting a site or restricting trading hours
• Import/export bans, sanctions, or changes in border controls

Supply Chain Disruptions (Sometimes)

• Port closures or shipping route shutdowns
• Critical component shortages due to an external event (for example, a factory shutdown after a natural disaster)

Supply chain issues are a common grey area. Some contracts treat them as force majeure, but others exclude them (or require you to source alternatives).

Industrial Action

• Strikes affecting transport, ports, or key suppliers
• Widespread industrial action impacting labour availability

Acts Of War, Terrorism, Or Civil Unrest

• Events that disrupt operations, transport routes, or access to key inputs
• Security incidents that make performance unsafe or impossible

Power Or Utility Failures

• Major network outages impacting production or service delivery
• Water or gas supply disruptions affecting a manufacturing process

Important: just because something is listed in your clause doesn’t automatically mean you’re excused. You still usually need to show causation (the event actually caused the failure or delay) and comply with any notice and mitigation requirements in the clause.

How Does A Force Majeure Clause Work In Practice?

Force majeure clauses are usually written to do two main things:

• Set out the events that count as force majeure
• Set out the consequences (what happens to the parties’ obligations)

While every contract is different, a typical force majeure clause will deal with:

1) Triggering Event

The clause will define which events qualify (for example, “acts of God”, natural disasters, government actions, pandemics, etc.).

Good drafting matters here. If the list is too narrow, you might not be covered. If it’s too broad, it can create uncertainty or be negotiated out by the other side.

2) Notice Requirements

Most clauses require the affected party to notify the other party:

• within a certain timeframe (sometimes very short)
• in a specific way (email may not be enough if the contract requires written notice to an address)
• with certain details (what happened, the impact, expected duration)

If you don’t comply with the notice requirements, the clause may limit your relief or affect your ability to rely on it (depending on how it’s drafted).

3) Duty To Mitigate

Many force majeure clauses require you to take reasonable steps to reduce the impact, such as:

• sourcing alternative suppliers
• using alternate delivery routes
• reallocating internal resources where possible

This is one reason force majeure is not a “get out of contract free” card. It’s often more like a structured pause button with responsibilities attached.

4) Relief Given (Suspension, Extension, Or Termination)

Depending on the clause, force majeure may allow:

• Suspension of performance while the event continues
• Extensions of time (especially common in construction or supply contracts)
• Termination if the event continues beyond a defined period (for example, 30, 60, or 90 days)

If you regularly sign customer or supplier agreements, having consistent terms across your documents can reduce disputes later - whether that’s in a custom Service Agreement or your broader trading documentation.

When Can You Use Force Majeure - And When Can’t You?

For small businesses, the hardest part is often knowing whether a force majeure clause is actually available to you in the moment.

Here are practical rules of thumb (with some important cautions).

When Force Majeure Is More Likely To Apply

• Your contract has a force majeure clause and your event fits the definition
• The event is genuinely outside your control
• The event prevents performance or causes significant delay (not just higher costs)
• You give notice correctly and on time
• You take reasonable steps to mitigate and keep the other party updated

When Force Majeure Often Does Not Apply

• Commercial hardship: “It’s too expensive now” is usually not enough (unless your clause is drafted unusually broadly)
• Foreseeable problems: if an issue was known or reasonably predictable when signing, the other party may argue it shouldn’t count
• Internal issues: staffing problems, cashflow issues, or poor planning are rarely force majeure
• Failure to comply with process: late notice or inadequate evidence can undermine your position

A Practical Example: Customer Deadlines

Let’s say you run a product-based business and promise delivery dates to customers. A sudden freight disruption delays your shipment by two weeks.

Force majeure might help you manage your supplier contract (if the disruption fits your supplier’s clause), but it may not automatically protect you with your customers unless your customer terms also include a force majeure clause.

This is why having aligned customer-facing terms matters - whether you operate online or offline. If you use online terms, they can sit alongside broader documents like Website Terms and Conditions that clearly explain delivery timing, delays, and risk allocation.

How Should Australian Businesses Draft A Strong Force Majeure Clause?

If you’re putting contracts in place (or updating older templates), force majeure clauses are worth a careful, tailored approach.

Below are the key drafting issues we recommend you think about.

1) Define Force Majeure Events Clearly (But Not Too Narrowly)

A clause often includes:

• a general definition (events beyond reasonable control)
• a non-exhaustive list (e.g. natural disasters, war, government action)

A non-exhaustive list can be helpful because it gives examples without limiting you to only those events.

But be careful: overly broad wording can create uncertainty, negotiations, and disputes over whether something “counts”.

2) Decide What Relief You Want (And What’s Fair)

Force majeure clauses don’t have to be one-sided. In many commercial relationships, a balanced clause is easier to agree on and preserve long-term.

Common outcomes to specify include:

• time extensions and revised milestones
• suspension of obligations (but not necessarily all obligations)
• partial performance where possible
• termination if the event lasts longer than an agreed period

You can also clarify what happens financially during the period - for example, whether deposits are refunded, whether payments are paused, and whether each party bears its own costs.

This is closely related to your broader approach to cancellation and delay. Many businesses deal with these risks through a combination of force majeure and well-drafted cancellation terms (including any cancellation fees provisions where appropriate).

3) Include Practical Notice And Evidence Requirements

A good clause usually answers:

• How quickly do you need to notify?
• Who do you notify and how?
• What details must you provide?
• Do you need to provide evidence (e.g. government directions, shipping notices, weather warnings)?

This helps both parties respond quickly and reduces misunderstandings.

4) Include A Mitigation Obligation (And Be Realistic)

Mitigation obligations make the clause more credible and fair. But they should be realistic for small businesses.

For example, it’s fair to require you to look for alternatives, but it may not be fair to require you to absorb unlimited extra cost to do so. Drafting can strike a balance (e.g. “reasonable endeavours” rather than “all endeavours”).

5) Make Sure Your Force Majeure Clause Matches The Rest Of The Contract

Force majeure clauses should align with other important contract terms, such as:

• delivery and timeframes
• payment terms and deposits
• termination rights
• limitation of liability and exclusions
• dispute resolution

For example, if your contract has strict liability for late delivery, but your force majeure clause doesn’t clearly suspend deadlines, you can end up in an avoidable dispute.

This is where it helps to look at your contract as a whole (including any limitation of liability clauses) instead of treating force majeure as a standalone paragraph.

Common Mistakes Small Businesses Make With Force Majeure (And How To Avoid Them)

Force majeure problems often aren’t caused by the event itself - they’re caused by unclear drafting or poor process when something goes wrong.

Here are common mistakes we see, and what you can do instead.

Mistake 1: Assuming Force Majeure Automatically Applies

If your contract doesn’t have a force majeure clause (or it’s too narrow), you may not have the flexibility you expect.

What to do instead: check your key templates (customer agreements, supplier agreements, logistics agreements) and make sure the clause is there and fit for purpose.

Mistake 2: Giving Late Notice (Or Giving Notice Incorrectly)

Even where force majeure clearly applies, many clauses require strict compliance with notice provisions.

What to do instead: build a simple internal process: when a disruption happens, identify the contract, check the notice clause, and send a compliant notice early.

Mistake 3: Using Force Majeure As A Threat Or Negotiation Weapon

Force majeure is meant to manage unexpected disruption. If it’s used aggressively, it can damage trust and commercial relationships.

What to do instead: approach it as a problem-solving tool. Propose alternatives, timelines, and options (including partial performance).

Mistake 4: Not Aligning Customer, Supplier, And Internal Contracts

You can get stuck in the middle if your supplier contract excuses delays but your customer contract doesn’t (or vice versa).

What to do instead: map your key obligations end-to-end. If you rely on subcontractors, make sure your subcontractor agreements mirror your delivery commitments where appropriate.

Mistake 5: Forgetting The Australian Consumer Law

If you sell to consumers (or small businesses that qualify as “consumers” under Australian Consumer Law), you still need to be careful about how you communicate delays, cancellations, refunds, and remedies.

Force majeure clauses can help, but they won’t override non-excludable consumer guarantees in many situations. Keeping your promises in advertising and customer communications also matters, particularly around misleading or deceptive conduct under the ACL.

This is especially important if your business offers warranties or makes claims about guaranteed delivery timelines and service outcomes.

Key Takeaways

• Force majeure is a contract clause that can suspend obligations or provide other relief when an event outside your control, as defined in the contract, prevents performance.
• If you’re searching for “what is force majeure example”, common examples include floods, bushfires, government orders, major utility failures, and certain supply chain disruptions (depending on the clause wording).
• Force majeure usually depends on what your contract says - it’s not an automatic right, and you often need to comply with notice and mitigation requirements (and the clause may set conditions on the relief available).
• A strong force majeure clause clearly defines events, sets out notice steps, requires reasonable mitigation, and explains whether obligations are suspended, extended, or terminated.
• Force majeure should fit with the rest of your contract, including termination rights and liability provisions, and your approach should also consider Australian Consumer Law where relevant.

If you’d like help reviewing or drafting a force majeure clause that fits your business contracts, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.