Force majeure
A contract clause covering events beyond the parties’ control that could not be foreseen or avoided – war, earthquake, epidemic, embargo, port closure – which temporarily or permanently prevent performance. A good clause lists the events, sets a notice period (often 7–14 days), defines the evidence required (e.g. a chamber of commerce certificate) and gives a right to terminate if the event lasts beyond a set time. Price increases or market changes are normally not force majeure.
Related terms
Sales contract
The core document setting out the parties’ rights and obligations in an international raw material sale. It should cover the product and specification, quantity and tolerance, price and currency, Incoterm and named place, shipment period, payment method, quality and quantity determination (inspection), insurance, force majeure, remedies for breach, governing law and dispute resolution. Where the parties’ countries allow it, the UN Convention on Contracts for the International Sale of Goods (CISG) applies unless expressly excluded.
Arbitration (international commercial arbitration)
Resolution of a dispute by arbitrators chosen by the parties instead of state courts, in a confidential and final procedure. Institutions such as ICC, LCIA, SIAC or ISTAC, or the rules of commodity associations (GAFTA, FOSFA, LME), are commonly used. Thanks to the New York Convention, awards can be recognised and enforced in more than 170 countries, which usually makes arbitration more effective than litigation between parties in different countries. The clause should name the institution, seat, language and number of arbitrators.