Force majeure is one of the first things contractors ask about when input costs rise sharply. In most cases, the honest answer is that it will not help. This article explains why, sets out the narrow circumstances where it might, and points to the realistic alternatives.
Force majeure is a contract clause that excuses a party from performing their obligations, or grants additional time to perform, when performance is prevented or delayed by an event outside that party’s reasonable control that could not reasonably have been anticipated or guarded against.
The clause is not implied by Australian law. It exists only if it is written into the contract. Its scope is limited to what the clause specifically says.
In Australian construction contracts, force majeure events are typically defined by a list or by a general description with specific inclusions: acts of God, war, terrorism, riots, pandemic, government action, and natural disasters.
Price increases are not physical prevention. Force majeure clauses are designed to address situations where a party is physically prevented from performing. A contractor who cannot get materials because a port is closed has a force majeure argument. A contractor who can get materials but at a higher price does not. Courts and arbitrators consistently distinguish between impossibility of performance and increased cost of performance.
Fuel price volatility is foreseeable. Force majeure clauses generally require the event to be unforeseeable at the time of contracting. Fuel price volatility is a well-known commercial risk in construction. It is the reason rise and fall clauses exist. A court is unlikely to accept that a contractor tendering in 2024 could not have foreseen that fuel prices might change during project delivery.
Blaze Business & Legal
Need advice on your specific position?
Three fixed-fee services covering your legal, cost, and business situation. Rachelle Hare and Shannon Drew directly.
Force majeure is not irrelevant to the 2026 cost environment. Specific scenarios worth examining: a government-imposed import restriction on a specific material your contract relies on; a natural disaster that physically disrupts your supply chain; a sanctions event preventing access to materials from a previously contracted supplier.
In each of these cases, the argument is about supply disruption, not price. That is a materially different claim.
Even where a force majeure event is established, the remedy in most Australian construction contracts is time, not money. The contractor gets an extension of time. They do not automatically receive additional cost.
Submitting a force majeure claim that gets rejected does not prevent you from pursuing variation claims or other contract rights, provided you do not take steps that are inconsistent with those claims. Get legal advice before taking any further steps after a rejection.
Blaze Business & Legal
Three fixed-fee services for construction businesses working through the cost crisis. Rachelle Hare and Shannon Drew directly, from the first conversation.
Rachelle Hare is a construction lawyer and business adviser with 25 years of experience, including in-house roles at Thiess, Laing O’Rourke, Acciona, DHA, and UGL. She advises construction businesses on contracts, cost recovery, risk, procurement, commercial strategy, and business structuring across Queensland and Australia.
