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It was difficult to avoid the impact of the worldwide IT outage which ground the world to a halt on 19 July 2024. Many of us were unable to take a flight, make payments and access digital systems.
If you or your business were affected by the outage, you may be wondering who is to blame. If your business was unable to deliver to your customers, are you now liable?
In any situation such as this, the first place to look will be your commercial agreements. In general terms, where you have been unable to fulfil your contractual obligations, your customer will have some form of financial claim against you.
One way to avoid this potential liability is to seek to rely on Force Majeure.
What is Force Majeure?
Force Majeure can reduce or eliminate liability for contractual failures which arise as a result of unavoidable or unforeseeable events which are beyond your reasonable control. These events must make it impossible either physically or legally for the contractual obligations to be performed.
You will only be able to rely on this removal of liability if the contractual agreement specifically includes a Force Majeure clause.
The extent of the clause is entirely dependent on the drafting, meaning that the clause will have to precisely state a particular event, such as a global IT outage, in order for the protection and remedy to be applicable to such an event.
In order to rely on the Force Majeure clause, you will also have to show that:
The Force Majeure event was outside of your reasonable control; and
The global IT outage was the only thing responsible for the non-performance of your obligations.
What benefits does a Force Majeure clause have?
If you are able to successfully rely on the Force Majeure clause, depending on its precise wording, you may be able to completely eliminate any liability, obtain further time to comply with your obligations or the contract may be temporarily suspended until you are able to perform your obligations.
You should also be aware that in some circumstances, the contract may be terminated in its entirety when a Force Majeure event occurs.
Did your commercial agreements provide adequate protection to your business during the worldwide IT outage?
It is very common for significant IT interruptions and failures to be included as a Force Majeure event. Other common Force Majeure events include war, non-performance by third party suppliers, and actions of government authorities. Does your business have adequate protection against these events?
Whether your business was affected by the global IT outage or not, you should now be reviewing your commercial agreements to ensure that they are fit for purpose.
FG Solicitors can work with you to ensure that your commercial agreements contain expertly drafted and robust Force Majeure clauses to protect your business against the unexpected.
WELCOME TO A MORE CONFIDENT FUTURE!
Contact FG Solicitors today on 0808 172 93 22 or complete our quick contact form for a no obligation discussion!
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This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.
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