Force Majeure Clauses in Commodity Trade Contracts
Quote from chief_editor on June 20, 2026, 5:30 pmHow force majeure clauses work in commodity trade contracts, what events are typically covered, and what a party must do to invoke force majeure and avoid liability for non-performance.
A force majeure clause is a contractual provision that excuses one or both parties from performance obligations when an extraordinary event beyond their control—often described as an act of God, act of war, or government action—prevents or delays performance. In commodity trade, force majeure provisions are commercially significant because the supply chains for bulk agricultural and industrial commodities are exposed to weather events, government export restrictions, port closures, and political disruptions that can prevent shipment regardless of the seller's commercial willingness and operational effort.
Force Majeure in GAFTA and FOSFA Contracts
Standard GAFTA and FOSFA contract forms do not use the term force majeure in the way it appears in civil law contracts. Instead, they use prevention of shipment clauses—more specific provisions that enumerate the types of events that excuse the seller from a shipment obligation. GAFTA 100 Clause 18 (shipment blocked) lists specific categories of qualifying events: strikes, lockouts, fire, accidents, ice, floods, frosts, government restraint, prohibition of export, blockade, or any other cause not within the control of the seller's country preventing shipment. The provision is narrower than an open force majeure clause: only events that prevent shipment from the contracted origin are covered; events that make performance more expensive or commercially disadvantageous are not.
Notice requirements are strict and material. Under most GAFTA and FOSFA prevention-of-shipment clauses, the seller must give notice within a defined number of days of the event occurring—typically 7 to 14 days. If notice is not given within the required period, the right to invoke the clause may be lost entirely, and the seller remains liable for non-performance even if the underlying event was genuine. GAFTA arbitration cases regularly turn on whether notice was given on time, whether it identified the qualifying event correctly, and whether the seller followed up with required documentation within the secondary timeframe.
Government Export Bans and Quantitative Restrictions
Government-imposed export bans or quantitative restrictions are one of the most commercially significant force majeure events in agricultural commodity trade. When a government unexpectedly restricts or prohibits exports of a commodity—as wheat-exporting countries periodically do in response to domestic price pressures or food security concerns—sellers under outstanding export contracts are caught between their contractual obligation to the buyer and the legal impossibility of obtaining an export license.
Whether a government export ban qualifies for the GAFTA prevention-of-shipment clause depends on the specific wording of the contract and the specific nature of the government measure. A complete export prohibition covering all exporters is more clearly within the clause than a quota restriction that reduces but does not eliminate export availability. A ban that applies only to government sales but leaves private trade open may not qualify at all. The seller bears the burden of demonstrating that the specific measure prevented shipment of the specific contracted commodity from the contracted origin.
In English law—governing most GAFTA and FOSFA contracts—the doctrine of frustration provides an alternative but narrower basis for excusing performance when a supervening event makes performance radically different from what the parties contracted for. Frustration is harder to establish than a contractual force majeure provision and is rarely available as an alternative when a properly drafted prevention-of-shipment clause was included in the contract.
Practical Steps When Invoking or Receiving Force Majeure
A seller invoking a prevention-of-shipment clause should: give written notice within the contractual timeframe identifying the event, obtain and attach official documentation confirming the event (government gazette publications, port authority notices, news agency confirmations), calculate the impact on the specific contracted shipment rather than referencing general market disruption, and continue efforts to perform if any portion of the obligation remains executable despite the event. If the event is partial—affecting only some of the contracted volume—the seller may be required to perform to the extent possible and claim force majeure only for the unperformable portion.
A buyer receiving a force majeure notice should verify the notice's procedural compliance (timing and content), assess the documentation provided, and consider whether the event genuinely prevents shipment or merely increases the seller's cost. If the notice appears non-compliant or the claimed event is disputed, the buyer should not simply accept it; challenging a force majeure invocation is the buyer's right, and accepting it without challenge may be interpreted as agreement that the clause was validly invoked.
How force majeure clauses work in commodity trade contracts, what events are typically covered, and what a party must do to invoke force majeure and avoid liability for non-performance.
A force majeure clause is a contractual provision that excuses one or both parties from performance obligations when an extraordinary event beyond their control—often described as an act of God, act of war, or government action—prevents or delays performance. In commodity trade, force majeure provisions are commercially significant because the supply chains for bulk agricultural and industrial commodities are exposed to weather events, government export restrictions, port closures, and political disruptions that can prevent shipment regardless of the seller's commercial willingness and operational effort.
Force Majeure in GAFTA and FOSFA Contracts
Standard GAFTA and FOSFA contract forms do not use the term force majeure in the way it appears in civil law contracts. Instead, they use prevention of shipment clauses—more specific provisions that enumerate the types of events that excuse the seller from a shipment obligation. GAFTA 100 Clause 18 (shipment blocked) lists specific categories of qualifying events: strikes, lockouts, fire, accidents, ice, floods, frosts, government restraint, prohibition of export, blockade, or any other cause not within the control of the seller's country preventing shipment. The provision is narrower than an open force majeure clause: only events that prevent shipment from the contracted origin are covered; events that make performance more expensive or commercially disadvantageous are not.
Notice requirements are strict and material. Under most GAFTA and FOSFA prevention-of-shipment clauses, the seller must give notice within a defined number of days of the event occurring—typically 7 to 14 days. If notice is not given within the required period, the right to invoke the clause may be lost entirely, and the seller remains liable for non-performance even if the underlying event was genuine. GAFTA arbitration cases regularly turn on whether notice was given on time, whether it identified the qualifying event correctly, and whether the seller followed up with required documentation within the secondary timeframe.
Government Export Bans and Quantitative Restrictions
Government-imposed export bans or quantitative restrictions are one of the most commercially significant force majeure events in agricultural commodity trade. When a government unexpectedly restricts or prohibits exports of a commodity—as wheat-exporting countries periodically do in response to domestic price pressures or food security concerns—sellers under outstanding export contracts are caught between their contractual obligation to the buyer and the legal impossibility of obtaining an export license.
Whether a government export ban qualifies for the GAFTA prevention-of-shipment clause depends on the specific wording of the contract and the specific nature of the government measure. A complete export prohibition covering all exporters is more clearly within the clause than a quota restriction that reduces but does not eliminate export availability. A ban that applies only to government sales but leaves private trade open may not qualify at all. The seller bears the burden of demonstrating that the specific measure prevented shipment of the specific contracted commodity from the contracted origin.
In English law—governing most GAFTA and FOSFA contracts—the doctrine of frustration provides an alternative but narrower basis for excusing performance when a supervening event makes performance radically different from what the parties contracted for. Frustration is harder to establish than a contractual force majeure provision and is rarely available as an alternative when a properly drafted prevention-of-shipment clause was included in the contract.
Practical Steps When Invoking or Receiving Force Majeure
A seller invoking a prevention-of-shipment clause should: give written notice within the contractual timeframe identifying the event, obtain and attach official documentation confirming the event (government gazette publications, port authority notices, news agency confirmations), calculate the impact on the specific contracted shipment rather than referencing general market disruption, and continue efforts to perform if any portion of the obligation remains executable despite the event. If the event is partial—affecting only some of the contracted volume—the seller may be required to perform to the extent possible and claim force majeure only for the unperformable portion.
A buyer receiving a force majeure notice should verify the notice's procedural compliance (timing and content), assess the documentation provided, and consider whether the event genuinely prevents shipment or merely increases the seller's cost. If the notice appears non-compliant or the claimed event is disputed, the buyer should not simply accept it; challenging a force majeure invocation is the buyer's right, and accepting it without challenge may be interpreted as agreement that the clause was validly invoked.