In RTI Ltd v MUR Shipping BV [2024] UKSC 18, the contract contained a clause stating that neither party would be liable for a failure or delay in performance caused by specified force majeure events and included a proviso that an event would only be a force majeure event if “it cannot be overcome by reasonable endeavors from the Party affected”. Therefore, force majeure does not require the acceptance of non-contractual performance.

The key facts were as follows:

  1. In 2018, RTI’s parent company was sanctioned by the US government which made it difficult for RTI to pay MUR on time in US dollars.
  2. MUR claimed the sanctions constituted a force majeure event under the contract and invoked the force majeure clause, suspending performance.
  3. RTI rejected MUR’s force majeure notice and offered to:
    1. pay MUR in Euro which could then be converted into US dollars by MUR’s bank; and
    2. compensate MUR for any additional costs or exchange rate losses in converting payments from Euros to US dollars.
  4. MUR rejected this offer, insisting on its right to payment in US dollars and maintaining that it was entitled to suspend performance under the force majeure clause.

While RTI presented their offer as one that reasonable business people would favour, the Supreme Court considered that overriding the performance actually required by the contract introduces uncertainty and held that a force majeure clause which required the affected party to use reasonable endeavours to overcome a force majeure event did not mean that party had to accept an offer of non-contractual performance from the other party.

The takeaway from this is that when drafting a force majeure clause for a supplier, it may be beneficial to require the party affected by force majeure to accept non-contractual performance where that non-contractual performance causes no detriment to the affected party.  Customers would however do well to resist this.

If you need advice on force majeure or contract in general, please contact me at s.li@teacherstern.com or +44 (0) 20 7611 2362.