Force majeure in 2026: what procurement contracts are getting wrong

The force majeure clause in your procurement contract was probably written for a world that no longer exists. It lists "acts of God," war, and maybe government action — events that read like insurance policy boilerplate from the 1980s. What it almost certainly does not list: pandemics, container shortages, port congestion, cyberattacks, tariffs, sanctions, export controls, or sustained climate-related disruptions. These are not fringe scenarios. These are the supply chain events of the last five years, and most standard form contracts were not designed to handle any of them.

Since COVID-19 exposed the inadequacy of generic force majeure language, the world has added trade wars, the Strait of Hormuz crisis, sweeping sanctions regimes, and a permanent high-tariff environment. Yet a significant portion of procurement contracts still rely on the same boilerplate. The result is a growing gap between what contracts allocate and what disruptions actually occur. This article identifies the four structural gaps and what a modern force majeure clause must address.

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Gap 1: The event list does not match the risk profile

The most visible failure of standard force majeure clauses is the narrowness of the covered-events list. Pre-COVID clauses typically covered "acts of God," war, strikes, and government action. When the pandemic shut down global supply chains, companies discovered their contracts had no explicit reference to epidemics, pandemics, quarantine orders, or government-imposed lockdowns. The International Bar Association noted that force majeure interpretation varied wildly by jurisdiction, with courts applying the "externality, unforeseeability and unavoidability" test differently depending on the clause's specific language.

The same problem has recurred with each subsequent disruption. Container shortages, port congestion, and logistics system failures — now permanent features of global trade — are absent from most legacy clauses. GreenPoint Legal argues that "more explicit and precise drafting will be necessary in the era of supply chain disruption, including to cover container shortages, port congestion, lack of transportation, unavailability of warehouse space, and every other conceivable parameter of 'disruption.'"

A 2026 clause should explicitly list: pandemics and epidemics, quarantine and lockdown orders, cyberattacks and IT system failures, port and transport closures, container and logistics system shortages, tariffs and trade restrictions above a defined threshold, sanctions and export controls, and specific climate-related events (wildfires, floods, sustained heatwaves). The list should be exhaustive for the specific commercial relationship, not a generic template.

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Gap 2: Economic hardship is not covered — and tariffs prove it

Force majeure was designed for impossibility, not unprofitability. Courts consistently rule that making performance more expensive or less profitable does not trigger force majeure. The Quarles law firm is explicit: "Even if a true force majeure event, such as a hurricane, disrupts the supply of raw materials, force majeure will not excuse performance if you are able to obtain the materials elsewhere, even at grossly inflated prices."

The tariff environment of 2024-2026 has made this gap acute. When US import tariffs on Chinese goods exceeded 60% on certain categories, suppliers and buyers found themselves with contracts that were economically impossible to perform but legally binding. Lexology advises: "If tariffs or trade restrictions are not mentioned, assume that simply saying 'it is more expensive to conduct business now' will not excuse non-performance."

Modern contracts must separate force majeure from hardship. Force majeure handles events that make performance impossible or illegal. Hardship clauses handle events that make performance economically unsustainable — tariff increases, freight cost surges, currency devaluations above 15%. Foley & Lardner recommends incorporating tariff-related protections explicitly: define the baseline tariff rate in the contract, specify what happens when tariffs exceed that baseline (renegotiation, cost-sharing, or termination rights), and tie the mechanism to objective triggers.

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Gap 3: No duty to mitigate means no one mitigates

Most legacy force majeure clauses define what happens when an event occurs — suspension of obligations — but say nothing about what the affected party must do to resume performance. This creates a perverse incentive: once the clause is invoked, the supplier has no contractual obligation to find alternative supply, reroute logistics, or partially perform.

Sirion's guide notes that "invoking force majeure does not eliminate the obligation to act responsibly. Most contracts require the affected party to take reasonable steps to minimize disruption and resume performance as soon as possible." The emphasis is on "most" — not all contracts include this language, and the absence is costly. During the container shortage crisis of 2021-2022, suppliers who invoked force majeure had no contractual obligation to seek alternative carriers, book space on different routes, or negotiate with freight forwarders. Buyers absorbed the full impact.

A well-drafted mitigation clause requires the affected party to: (1) notify the counterparty within 48 hours of the force majeure event with supporting evidence, (2) provide weekly updates on the disruption and mitigation efforts, (3) use commercially reasonable efforts to find alternative sources of supply or substitute logistics, including at higher cost up to a defined threshold, and (4) resume full performance as soon as the force majeure event ends. Colin Biggers & Paisley emphasizes that detailed procedural requirements — notice timing, evidence standards, reporting cadence — prevent the disputes that arise when one party claims force majeure and the other claims inadequate effort to mitigate.

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Gap 4: Binary on-off fails in protracted disruptions

Traditional force majeure clauses treat disruption as a binary: either you can perform (no relief) or you cannot (full suspension or termination). Most modern disruptions are neither. A 25% tariff increase does not make performance impossible, but it may make it economically unsustainable over a 12-month contract. A port strike lasting 45 days does not prevent all shipments — some goods may still move through alternative ports at higher cost. A cyberattack may disable the procurement system but leave production capacity intact.

GT Setu describes the standard approach: "If the force majeure event continues beyond the threshold in the contract (typically 60-180 days), both parties face a decision." The problem is that during those 60-180 days, the binary structure provides no middle ground. Partial performance, volume reductions, temporary price adjustments, and structured renegotiation are all possible responses, but none are contractually enabled by standard force majeure language.

The solution is a tiered disruption framework. Modern contracts should define three levels of disruption response within the force majeure clause:

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What reformed procurement contracts look like in 2026

The firms that have updated their force majeure language since 2024 share several structural features. First, they separate force majeure (impossibility or illegality) from hardship (severe economic disruption) into distinct clauses with different triggers, consequences, and termination rights. Baker McKenzie's 2026 guidance explicitly recommends this separation, noting that "force majeure has traditionally been the primary contractual tool for managing unforeseen events" but that modern disruptions require coordination with change-management and price-adjustment mechanisms.

Second, they include tariff and trade-measure provisions that define a baseline tariff rate and specify the consequences of increases above that baseline. K&L Gates confirms that "contractual force majeure clauses may serve as a basis for relief when deals turn bad due to significant changes in trade regulations, including tariffs," but only if the clause specifically includes them.

Third, they require mitigation as a precondition for invoking force majeure. The affected party must demonstrate it has exhausted commercially reasonable alternatives before seeking relief. This aligns with Honigman's observation that "a party must make reasonable efforts to overcome performance obstacles, and only if those efforts fail may performance be deemed impracticable."

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What this means in practice

• Audit your top 20 supplier contracts by spend right now. Pull the force majeure clause from each. Check for: pandemic coverage, tariff language, mitigation obligations, hardship provisions, and termination timelines. If any of these are absent, flag the contract for renegotiation at the next renewal. Prioritize contracts in categories exposed to trade policy volatility — electronics, metals, chemicals, and industrial components.
• Add a tariff baseline provision to every new cross-border contract. Define the starting tariff rate (e.g., "the US HTS rate in effect on the contract execution date"). Specify what happens above that baseline: a 10-15% increase triggers price renegotiation, a 25%+ increase triggers a termination right for either party within 60 days. Without this provision, tariff increases become a dispute, not a contract mechanism.
• Separate force majeure from hardship clauses. Force majeure covers impossibility and illegality (export bans, sanctions, port closures). A separate hardship clause covers economic unsustainability (tariff spikes above 25%, currency devaluation above 15%, freight cost increases above 50%). Each should have distinct triggers, notice requirements, and termination rights.
• Define mitigation obligations explicitly. Every force majeure clause should require the affected party to: notify within 48 hours with evidence, provide weekly status updates, seek alternative supply or logistics at up to 15% above contract price, and resume full performance within 14 days of the event's end. Remove the ambiguity that leads to disputes.
• Build a tiered response framework into new contracts. Replace binary on-off with three levels: minor (0-14 days, suspension of non-critical obligations), moderate (14-60 days, partial performance + price renegotiation), severe (60+ days, termination rights + transition assistance). Match the duration thresholds to your category's lead times and inventory coverage.

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Frequently asked questions

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