What is Force Majeure in Construction Contracts?
Force Majeure is a contractual mechanism for granting relief when specified events beyond a party’s control affect performance. Contractors and Subcontractors may receive additional time, relief from affected obligations or other remedies specified in their contract. Australian law does not provide an automatic entitlement to Force Majeure relief.
The parties must agree which events qualify, the required effect on performance and the consequences. A reference to Force Majeure without an effective definition and operative clause may leave the parties uncertain about their rights.
Why are Force Majeure clauses important?
Contractors and Subcontractors can remain responsible for completing the Works despite serious disruption outside their control. Without applicable contractual relief, affected businesses may bear additional costs and face Liquidated Damages for late completion.
Through their Construction Contracts, the parties can agree who bears the consequences of unusual disruption before a flood, war or other specified event occurs. The parties can also agree when affected obligations are suspended and when prolonged disruption permits termination.
Not every Construction Contract needs a separately labelled Force Majeure clause. The parties may address particular risks through Extension of Time, Change in Law, suspension or other provisions. During negotiations, Contractors and Subcontractors should identify any disruption risks left outside those provisions and consider whether to include Force Majeure.
Establishing entitlement to Force Majeure relief
Contractors and Subcontractors must establish that the disruption falls within the agreed definition and has the required effect on their contractual obligations. An event being outside the claimant’s control does not, by itself, establish entitlement.
Before claiming, you should read the signed contract, including the General Conditions, Special Conditions, Annexure and incorporated documents.
- You should identify the event relied on, such as a cyclone, port closure or government order, and the wording that covers that event.
- You need to check exclusions for events such as material shortages, industrial action, financial hardship or foreseeable disruption.
- You should establish whether the clause requires performance to be prevented, hindered or delayed, rather than merely more expensive.
- You need to connect the identified event to the obligation affected, including the required effect on completion when claiming an Extension of Time.
- You should check the contract’s requirements for reasonable control, foreseeability, mitigation and available alternatives.
For example, Contractors and Subcontractors affected by a cyclone should examine both the Force Majeure definition and any separate weather provisions. The available relief for cyclone-related delays may depend on an Extension of Time clause rather than Force Majeure.
Additional time and additional costs
Depending on the wording of the relevant Force Majeure or Extension of Time clause, Contractors and Subcontractors may receive extra time without reimbursement of their additional costs. Claimants should assess each entitlement separately.
| Relief sought | Contractual entitlement to establish |
|---|---|
| Extension of Time | Claimants must establish a qualifying cause of delay and satisfy the contractual requirements for extending the relevant completion date. |
| Relief from Liquidated Damages | Claimants should establish how an approved Extension of Time or express exemption affects liability for the relevant delay period. |
| Delay or prolongation costs | Claimants need a payment entitlement covering the cause of delay and the types of additional costs claimed. |
| Increased material or fuel costs | Claimants should examine any price adjustment, Rise and Fall or other cost recovery provision, including its exclusions and calculation method. |
| Variation | Claimants must establish a change qualifying under the Variation provisions and comply with the direction, notice and valuation requirements. |
Higher prices do not automatically make unchanged work a Variation. Where the Principal or Head Contractor directs a change to materials or scope, the affected business should assess the price and time consequences under the Construction Contract Variations provisions.
The Project Team should also obtain any required approval before substituting materials, including agreement on design responsibility and warranties. A substitute product’s higher price does not establish reimbursement under Force Majeure.
Giving a Force Majeure notice
Contractors and Subcontractors should give notice within the contractual deadline, to the recipient and by the delivery method required under the contract. Claimants must include the particulars required by the relevant clause.
You should examine the notice requirements as soon as a potentially qualifying disruption occurs. Waiting for a final delay calculation or cost total may put your business outside the contractual time limit.
- You should record when the disruption began and when your business became aware of the disruption, then identify the contract’s trigger for the notice period.
- You need to identify the clause relied on and describe the specific event, affected obligations and expected effect on the Works.
- You should provide the duration, delay estimate, cost information and supporting particulars required by the contract, identifying any permitted provisional estimates.
- You need to explain the mitigation steps taken or proposed, including alternative supply, revised sequencing or other measures required under the contract.
- You should serve the notice on the contractual recipient using the permitted delivery method and retain evidence of service.
- You need to record the deadlines for further particulars, continuing notices, claim submissions and any notification that the disruption has ended.
Separate notices for related claims
The contract may require an initial disruption notice, an Extension of Time claim and a separate cost claim. Claimants should establish whether one document can satisfy every requirement or whether separate notices are necessary.
Commercial Managers should record each notice’s trigger, deadline, recipient and required particulars. A Force Majeure notice does not automatically preserve an entitlement under another clause, even when the underlying disruption could qualify as Force Majeure.
Evidence supporting a Force Majeure claim
Contractors and Subcontractors need Project records connecting the identified disruption to the claimed delay, cost or inability to perform. News reports about a war or flood will not establish the effect on a particular Project.
- Project Managers should retain site diaries, photographs, access records and official closure directions identifying the affected Works.
- Commercial Managers should retain the program current before the disruption and subsequent updates showing affected activities and any delay to the critical path.
- Procurement Teams should retain Purchase Orders, promised delivery dates and Supplier correspondence explaining the cause and duration of an interruption.
- Project Teams should record alternative Suppliers, substitute products and revised work sequences considered, including why an available alternative was unsuitable.
- Accounts Teams should record additional expenditure separately from costs already allowed for in the Project budget.
In a hypothetical steel supply claim, the Project Team would need evidence connecting a port closure to the ordered steel and the delayed construction activity. Claimants should distinguish any earlier procurement delay from the additional delay attributed to Force Majeure.
Force Majeure under AS 4000 and other standard forms
Neither unamended AS 4000-1997 nor AS 4000:2025 includes a standalone Force Majeure clause or definition of a Force Majeure Event. Users must examine the agreed delay provisions and any amendments for relevant relief.
Under AS 4000-1997, Contractors should examine the qualifying causes of delay and clause 34, together with the completed Annexure and Special Conditions. Contractors must assess time entitlement separately from any entitlement to delay costs.
The 2025 publication does not change an existing contract signed using the 1997 edition. Parties using either edition should assess the complete contract agreed for their Project, including any added Force Majeure provisions.
Users of other forms should also identify the edition and amendments. FIDIC’s 1999 suite uses Force Majeure terminology, while the 2017 suite uses Exceptional Events. Neither terminology nor the standard form’s name establishes the relief available under the signed contract for Force Majeure.
Construction Contract Review and Force Majeure
A Construction Contract Review should establish whether the proposed Force Majeure provisions give Contractors and Subcontractors usable rights. The review needs to address the definition, claim process, available relief and interaction with the rest of the contract.
Definitions and qualifying events
The parties should define Force Majeure or Force Majeure Event without circular wording. Defining a Force Majeure Event merely as “an event of force majeure” does not explain which disruptions the parties intend to cover.
Contractors and Subcontractors should examine the listed events, exclusions, geographical limits and any requirements for unforeseeability or circumstances beyond reasonable control. Coverage for a Supplier’s disruption also needs express consideration when drafting Force Majeure.
Notice procedures and consequences
The parties should agree who gives notice, when notice is due, what information must be supplied and how the recipient assesses the claim. Contractors and Subcontractors should negotiate deadlines that permit compliance using information reasonably available during the disruption.
The contract should specify whether successful claimants receive time, costs, relief from affected obligations or a combination. The parties should also address continuing work, mitigation, resumption, prolonged disruption and payment following termination for Force Majeure.
Interaction with other contractual rights
Contractors and Subcontractors should distinguish ordinary delay events from unusual disruption intended to qualify as Force Majeure. Depending on the contract, late access, directed changes, adverse weather or particular supply delays may already qualify under other provisions.
Through Construction Contract Drafting, the parties can address known risks separately and coordinate the related claim procedures. Claimants should not have to assume that an Extension of Time, Variation or prolongation cost entitlement also exists under Force Majeure.
Head Contracts and Subcontracts
Subcontractors and Suppliers do not automatically receive relief because a Head Contractor succeeds with an upstream Force Majeure claim. Each business must establish rights under its own contract, including any incorporated terms.
During Construction Contract Negotiation, Head Contractors and Subcontractors should compare the defined events, notice periods, evidence requirements and available remedies. Downstream notice periods need to leave enough time for Head Contractors to prepare compliant upstream claims.
The parties should expressly address whether and how corresponding relief passes downstream. Head Contractors should also identify any downstream obligations to grant relief without equivalent recovery from the Principal.
If a Subcontract or supply agreement contains no applicable Force Majeure provision, the affected business must examine other contractual and legal rights. Subcontractors should not assume that a reference to the Head Contract automatically incorporates its Force Majeure clause.
Rachelle Hare – In my experience
When reviewing a Construction Contract, I check whether a Contractor or Subcontractor can follow the claim procedure and obtain the relief described. I also compare the Head Contract and downstream agreements for differences in notice periods and entitlement.
For a known supply risk, I would consider specific wording addressing delay and additional cost rather than assume the disruption will qualify as Force Majeure.
Lessons from COVID-19 and Force Majeure
Contractors and Subcontractors cannot assume that a further COVID-19 outbreak would qualify under a contract signed after the pandemic became known. Where the clause requires an unforeseeable event, a further outbreak may fail that requirement.
The contracting date and agreed wording remain decisive. Parties can expressly allocate the consequences of a known pandemic without making unforeseeability a condition of relief. A new pandemic involving a different disease would still need to satisfy the contract’s definition and other requirements.
Pandemic-specific clauses allow the parties to distinguish the outbreak itself from consequences such as border restrictions, mandatory isolation, site closures and delayed overseas manufacture. The parties can also identify which existing restrictions were allowed for in the price and program.
The NSW Crown Solicitor’s Office discusses specific COVID-19 provisions for contracts entered into during the pandemic. For later contracts, Contractors and Subcontractors should negotiate express treatment of known pandemic risks instead of assuming another outbreak will qualify as Force Majeure.
The 2026 global fuel crisis and Force Majeure
The war involving Iran and the near closure of the Strait of Hormuz disrupted oil shipments in early 2026. The International Energy Agency documented the March 2026 supply disruption and effects on fuel markets.
Contractors and Subcontractors affected by the crisis need to distinguish the underlying war or shipping restriction from consequential fuel shortages, higher diesel prices and difficulty obtaining materials. Coverage for one consequence does not establish coverage for every resulting loss.
War and restrictions on shipping
War and a blockade or closure of a shipping route may fall within clauses expressly covering those events. Claimants must still satisfy geographical restrictions, causation requirements and the contractual threshold for prevention, hindrance or delay.
For an Australian Project, a claimant would need to establish how the overseas disruption affected the particular contractual obligation. A clause limited to war within Australia may not cover a Middle East conflict as Force Majeure.
Diesel shortages and higher prices
Contractors and Subcontractors paying more for available diesel may be unable to establish that performance was prevented. A business unable to obtain diesel needed to operate plant would need evidence of the shortage, available alternatives and the resulting effect on the Works.
The contract may also exclude shortages, increased costs or Supplier failures even where war is a listed event. Depending on the wording, claimants may have time relief, a price adjustment entitlement, both or neither.
Before claiming, affected businesses should examine the Force Majeure, Extension of Time, price adjustment and Change in Law provisions separately. Government action taken during a fuel crisis may raise a different contractual claim from the war itself or its treatment as Force Majeure.
Frustration, suspension and termination
Contractors and Subcontractors should obtain advice before stopping work or asserting a right to terminate following serious disruption. A Force Majeure claim does not automatically permit either step.
For contractual termination, the parties need to establish who may terminate, the qualifying period of disruption and the required notice procedure. A clause may give the termination right only to the unaffected party.
The parties should also establish payment rights for completed Works, ordered materials and demobilisation, together with any continuing obligations concerning Security and insurance. A right to suspend affected work does not necessarily excuse performance of unaffected obligations.
Under the separate doctrine of frustration, parties must establish a supervening event that makes performance radically different from the agreed obligation, without either party’s default. Mere increased expense or reduced profitability is insufficient.
The Australian Government Solicitor explains that frustration discharges future performance. The parties must consider the contract’s existing allocation of the relevant risk, including any applicable Force Majeure provisions.
FAQs About Force Majeure
1. Does Force Majeure apply without a clause?
Contractors and Subcontractors have no automatic Force Majeure entitlement under Australian common law without applicable contractual terms. The agreed contract may still provide relief through an Extension of Time, suspension or another provision. Frustration requires a separate legal assessment and does not provide a general right to extra payment.
2. Must performance be impossible to claim Force Majeure?
The threshold for a Force Majeure claim depends on the agreed wording. A claimant under a clause requiring prevention of performance faces a different test from a claimant under wording covering hindrance or delay. The affected business must establish the required effect on the particular obligation and satisfy the remaining contractual conditions.
3. Are floods and cyclones automatically Force Majeure Events?
Floods and cyclones are not automatically Force Majeure Events under every Construction Contract. Contractors and Subcontractors should examine the definition, weather exclusions and any separate Extension of Time provisions. The claimant must establish the required effect on the Works and comply with the applicable notice and mitigation requirements.
4. Can Suppliers declare Force Majeure and stop delivery?
Suppliers can claim Force Majeure relief only where the supply agreement permits that relief and the contractual conditions are satisfied. On receiving a Supplier’s notice, Contractors and Subcontractors should examine the cited provision, supporting evidence, expected interruption and available alternatives before accepting an entitlement to stop delivery.
5. Does Force Majeure excuse payment?
Force Majeure does not automatically excuse payment for completed work or supplied materials. The parties should examine the affected obligations, payment exclusions and applicable Security of Payment legislation before withholding an amount otherwise due. A right to suspend future performance may leave existing payment obligations unchanged.
6. What happens after a late Force Majeure notice?
A late Force Majeure notice may defeat an entitlement where the contract imposes an effective time bar. Contractors and Subcontractors should obtain advice on the notice wording, relevant dates and any available response. The effect of late notice must be assessed separately for each contractual claim.
7. Can another claim proceed after a Force Majeure rejection?
Contractors and Subcontractors may pursue another claim after a Force Majeure rejection if the facts support that entitlement and the relevant contractual requirements have been met. Claimants should examine separate notice deadlines and any release already given. Rejection under one clause does not establish entitlement under another.
8. Can a standard Force Majeure clause be used?
The parties can use a standard Force Majeure clause as a starting point. Before signing, Contractors and Subcontractors should assess the wording against the Project’s procurement arrangements, known risks and other contract provisions. The parties need clear agreement on qualifying events, claim procedures and the relief available.
Get advice on Force Majeure rights and contract terms
Rachelle Hare helps Contractors and Subcontractors establish whether a disruption entitles their business to Force Majeure relief and which time or cost claims are available under the contract.
Through Construction Contract Advice, Rachelle can assess entitlement, advise on notices and supporting evidence, and assist with rejected claims. Before signing, Rachelle can review, draft or help negotiate Force Majeure provisions and the related Head Contract and Subcontract terms.
Rachelle delivers the Legal Services personally through Blaze Business & Legal, with a fixed-price quote for the agreed scope.
Call Rachelle on (07) 3063 3373 for a free chat to discuss how she can help.
