Will is currently completing his Juris Doctor at the University of Melbourne and is interested in helping to provide equitable and efficient access to legal resources.
Most business owners don’t think about “worst case scenarios” when they’re signing a new contract. You’re focused on the exciting part: selling, building, delivering, and getting paid.
But real life has a way of disrupting even the best plans - severe weather events, supply chain breakdowns, sudden law changes, or critical infrastructure failures can all make it genuinely hard (or sometimes impossible) to perform a contract on time.
That’s where a force majeure clause comes in. This 2026 update reflects how commonly these clauses are now negotiated in New Zealand contracts, and why it’s worth getting the wording right before you sign.
Below, we’ll break down what a force majeure clause is, when it applies, what to include, and the practical steps you can take to protect your business from day one.
What Is A Force Majeure Clause (In Plain English)?
A force majeure clause is a contract term that sets out what happens if something outside the parties’ control prevents (or significantly delays) one or both parties from meeting their obligations.
In simple terms, it’s a “deal with disruptions” clause. It usually does three main things:
- Defines what counts as a force majeure event (for example, natural disasters, war, government action, pandemics, major outages).
- Explains the consequences (for example, time is extended, obligations are suspended, or the contract can be terminated after a certain period).
- Sets out the process (for example, notice requirements, mitigation steps, and evidence needed).
Without a force majeure clause, you’re often left relying on general contract law principles and whatever remedies are already in the agreement - which may not be designed for unusual, high-impact events.
If you want a deeper general overview of the concept, force majeure is also commonly discussed alongside other risk-allocation clauses like limitation of liability and termination rights.
Is “Force Majeure” A Legal Term With A Fixed Meaning In NZ?
Not exactly. “Force majeure” isn’t automatically implied into contracts under New Zealand law. It usually only applies if the contract includes a properly drafted clause.
That means the details really matter. Two clauses both labelled “Force Majeure” can operate very differently depending on what they say.
Practically, if a dispute ends up in negotiation, mediation, or a court/tribunal setting, the key question tends to be: what did the contract actually say would happen?
When Does A Force Majeure Clause Apply (And When Doesn’t It)?
A force majeure clause usually applies when:
- an event happens that falls within the clause’s definition (for example, “earthquake”, “government restriction”, “port closure”);
- the event is genuinely beyond the affected party’s reasonable control;
- the event actually prevents or delays performance (not just makes it less profitable or more annoying); and
- the affected party follows the clause’s process (especially notice requirements and mitigation).
It usually doesn’t apply where:
- the issue was foreseeable and could reasonably have been planned for (depending on wording);
- the party could still perform by taking reasonable alternative steps, but didn’t;
- the problem is purely financial (for example, cashflow issues), unless the clause explicitly covers it; or
- the party simply wants an excuse to exit a bad deal.
Common Examples In Business Contracts
Force majeure clauses are common across many industries, but they come up a lot in:
- Supply agreements (raw material shortages, shipping delays, export/import restrictions)
- Service arrangements (key staff unavailable, major outages affecting delivery)
- Construction and project work (extreme weather, site access restrictions)
- Events and bookings (venue closures, government limits)
- Commercial tenancies (access restrictions, building closures, damage to premises)
If your contract is part of ongoing delivery (like recurring services), you’ll often see force majeure sitting alongside a broader framework agreement such as a Master Services Agreement, where the “rules of the relationship” are spelled out once and applied to each project or statement of work.
What Should A Strong Force Majeure Clause Include?
A “good” force majeure clause isn’t necessarily the strictest or the most generous - it’s the one that matches your business risks and makes outcomes predictable when things go wrong.
Here are the key elements we typically look for when reviewing or drafting force majeure clauses for NZ businesses.
1) A Clear Definition Of “Force Majeure Event”
This is where contracts can either be helpful or incredibly vague. Ideally, your clause will include:
- a general definition (something beyond reasonable control); and
- a non-exhaustive list of examples relevant to your industry.
Examples often include:
- natural disasters (earthquake, flood, fire, storm)
- war, terrorism, civil unrest
- epidemic/pandemic and public health orders
- government action (laws, regulations, restrictions)
- labour strikes (sometimes excluding your own staff/contractors - this is negotiable)
- failure of utilities or telecommunications networks
- port closures or transport disruptions
Tip: If your contract relies on a particular overseas manufacturer, a specific shipping route, or a critical platform provider, you may want the clause to reflect that dependency - otherwise you can end up arguing over whether the event really fits the definition.
2) A Causation Threshold (Prevented vs Hindered vs Delayed)
Different clauses use different wording, and it changes how easy the clause is to rely on:
- “Prevents” is usually stricter - performance must be impossible or practically impossible.
- “Hinders” can be broader - performance is significantly obstructed.
- “Delays” focuses on timing, and often triggers extension of time rights.
If you’re the party delivering goods/services, a clause that covers “delays” can be crucial. If you’re the customer, you may prefer a narrower trigger (and strong termination rights if delays go on too long).
3) Notice Requirements (And Timeframes)
Most force majeure clauses require the affected party to notify the other party:
- as soon as reasonably practicable (or within a set number of days);
- with details of the event and impacted obligations; and
- with expected duration and steps being taken to minimise disruption.
Notice sounds administrative, but it’s often where disputes start. If the clause requires notice within (say) 5 business days and you miss it, the other party may argue you can’t rely on force majeure at all.
4) Mitigation Obligations
Mitigation means you can’t just throw your hands up and do nothing.
A force majeure clause typically requires you to take reasonable steps to reduce the impact - for example:
- sourcing alternative suppliers where feasible;
- using substitute materials (if contract specs allow);
- shifting to remote delivery methods;
- prioritising critical milestones; or
- working around outages with reasonable business continuity steps.
This is one reason it’s smart to have your core commercial arrangements properly documented from the start (for example, under a tailored Service Agreement), so your obligations and standards are clear before disruption hits.
5) The Consequences: Suspension, Extension Of Time, Or Termination
Force majeure clauses commonly provide that:
- affected obligations are suspended for the duration of the event;
- deadlines are extended (often by the length of the delay); and/or
- either party can terminate if the event continues beyond a set period (for example, 30, 60, or 90 days).
This is where you want to be really careful. If termination rights are too easy to trigger, you might accidentally give the other side a “free exit” from a contract they no longer like.
On the flip side, if termination rights are too hard to trigger, you may be stuck in limbo with no delivery and no clean way out.
6) Payment And Cost Allocation
A big practical question is: who pays for what during a force majeure period?
Depending on the deal, the clause might cover:
- whether payments are paused, reduced, or still payable;
- whether deposits are refundable;
- whether you can pass through unavoidable third-party costs; and
- what happens to prepaid services or minimum order quantities.
There’s no “one size fits all” approach here - it depends on bargaining power and the commercial reality of the relationship.
How Does Force Majeure Work With NZ Contract Law?
Even with a force majeure clause, you still need to think about how it fits into the rest of the contract (and New Zealand contract law more broadly).
Force Majeure vs Termination Rights
Many business contracts already have general termination rights (for breach, insolvency, convenience, or non-performance). Force majeure clauses usually interact with those rights rather than replacing them.
For example, a well-drafted contract might say:
- non-performance due to force majeure is not a breach (during the force majeure period); but
- either party can terminate if the event continues beyond a set timeframe.
If you end up needing to exit a contract, it’s important to follow the agreement’s termination process carefully - including required notices and timing. This is one reason businesses often seek advice before terminating a contract, even where the relationship feels like it’s already broken down.
Force Majeure vs “Frustration”
Sometimes you’ll hear people say, “The contract is frustrated.” That’s a separate legal concept where an unforeseen event makes the contract impossible to perform (or radically different from what was agreed), and the contract may come to an end by operation of law.
In practice, frustration can be hard to prove and depends heavily on the facts.
That’s why, for most businesses, a force majeure clause is the more predictable tool - because it sets the rules upfront.
Force Majeure vs “Hardship” (Cost Increases)
Not all clauses cover price spikes, inflation, or major cost increases. Many force majeure clauses won’t help you if your supplier price doubles but you can still technically deliver.
If cost volatility is a real risk in your industry, you may need a separate price adjustment mechanism, a change control process, or carefully drafted scope and variation terms (especially for project-based services).
Force Majeure In Leases And Property Arrangements
Force majeure can appear in property-related documents, but it doesn’t automatically mean “no rent is payable” if something goes wrong.
Rent abatement, access issues, and closure scenarios are often handled through specific lease clauses and statutory settings, rather than a generic force majeure paragraph.
That’s why it’s worth getting advice on a Commercial Lease Agreement before you sign - because the practical risk is usually about rent, outgoings, access, and the ability to trade.
Practical Steps: How To Use (And Negotiate) A Force Majeure Clause
Once you understand the basics, the next step is making sure your contract is actually workable in the real world.
1) Identify Your Biggest “Can’t Deliver” Risks
Ask yourself:
- What do you rely on that could realistically fail (supply chain, staff, software, premises, shipping)?
- What obligations are time-critical (delivery deadlines, launch dates, service levels)?
- What would happen if you couldn’t perform for 2 weeks? 2 months?
This helps you tailor the clause to your business, instead of accepting whatever wording is in the other party’s template.
2) Make Sure The Clause Matches The Rest Of The Contract
Force majeure should align with:
- service levels and KPIs
- delivery timelines and milestones
- payment terms
- termination rights
- limitation of liability and indemnities
If your agreement is a mix of documents (for example, a quote, an order form, and a set of terms), it’s important that the “contract package” is consistent - otherwise you can end up arguing over which document controls. Understanding what makes a contract legally binding is useful here, because disputes often turn on which terms were actually incorporated.
3) Don’t Treat Force Majeure As A Copy-Paste Clause
This is where businesses get caught out.
A generic clause might:
- be too narrow (so you can’t rely on it when you need it); or
- be too broad (so the other party can rely on it to avoid accountability).
It can also create unintended consequences - like letting the other party terminate early, or forcing you into unrealistic notice requirements.
As a general rule, it’s safer to treat force majeure as a “high impact” clause that deserves proper drafting and review, rather than something to DIY from a template.
4) If A Force Majeure Event Happens, Act Early
If something disruptive occurs and you think force majeure might apply, the best steps usually are:
- Read the clause carefully and identify notice requirements and time limits.
- Send a written notice (even if details are still unfolding), and keep records.
- Document the impact (supplier emails, government notices, outage reports, etc.).
- Mitigate where reasonable, and show what you’ve tried.
- Communicate commercially - many disputes are avoided by agreeing revised timelines and temporary workarounds.
If the situation is escalating, getting tailored legal advice early can save you a lot of cost later - especially if you’re dealing with high-value projects, key customers, or public-facing obligations.
Key Takeaways
- A force majeure clause is a contract term that explains what happens if an event outside your control prevents or delays performance.
- Force majeure generally only applies in New Zealand if your contract includes an appropriate clause - the wording is crucial.
- A strong clause clearly defines force majeure events, sets a performance threshold (prevented/hindered/delayed), and includes notice and mitigation requirements.
- The clause should also deal with consequences like extensions of time, suspension of obligations, payment allocation, and termination rights if disruption continues.
- Force majeure needs to fit with the rest of your contract (service levels, payment terms, limitation of liability, and termination clauses) to avoid gaps and disputes.
- If a potential force majeure event occurs, act early: follow the notice process, keep evidence, mitigate reasonably, and communicate clearly.
If you’d like help reviewing or drafting a force majeure clause (or your broader contract terms) so you’re protected from day one, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.