Force majeure and faulty prerequisites – how to protect your business in 2025

Unforeseen events such as geopolitical tensions, trade barriers, extreme weather events and pandemics are no longer the exception, but part of the business risk landscape. The question is no longer whether unforeseen circumstances will occur, but how companies can best deal with them contractually. In this article, we take a closer look at the case law on unforeseen circumstances and the importance of force majeure clauses in commercial contracts.

Broken prerequisites – rarely a way out of the contract

The starting point in Danish contract law is clear: agreements must be kept, cf. section 1 of the Danish Contract Act. In practice, it is very difficult to be released from a contract with reference to “broken assumptions” – even if events have affected the very core of the agreement.

Danish courts are very reluctant to change or set aside contractual obligations, even in situations where:

• Economic conditions have changed (e.g. significant price increases in raw materials or wages),
• commercial conditions are disrupted (e.g. bankruptcy of subcontractors or loss of major customers), or
• Physical conditions have changed drastically (e.g. weather conditions, transportation disruptions, breakdown of critical equipment).

Failure to account for such events in the contract leaves businesses in a legally uncertain terrain where the outcome of any dispute can be difficult to predict.

Force majeure – the contract safety valve

Force majeure clauses are an essential and often necessary part of modern contract management. There is no overall legal definition of force majeure in Danish law – the concept only has the content that the parties themselves give it in the contract.

A typical force majeure clause should address the following key points:

1. Definition and scope of coverage

What events are covered by force majeure? It can be, for example:

• War, rebellion, embargo, trade restrictions
• Natural disasters like storms, floods and earthquakes
• Epidemics and pandemics
• Cybersecurity incidents or technology failure
• Government interventions and lockdowns
• Nationwide strikes, lock-outs, etc.

Also consider including industry-specific or supply chain-related conditions – for example, price increases for a specific component, or loss of access to a strategic transportation corridor.

2. Duty to notify

This should be clarified:

• When and how to report a force majeure situation
• What information the affected party must provide
• What documentation is required (e.g. statement from authority or trade association)

3. Duty to remedy and victim threshold

Does the affected party have a contractual obligation to try to remedy the situation? And if so, which one?

• Does the company need to find an alternative supplier?
• Should you accept higher costs?
• Is there a financial “sacrifice threshold” – for example, accepting additional costs of up to 15%?

4. Legal consequences

Typically, force majeure means that:

• The parties are released from liability for the duration of the force majeure
• Delivery deadlines are suspendedBut it should also be addressed:
• Should work resume as soon as possible?
• Can the buyer demand acceleration of the work afterwards?
• When do the parties have the right to terminate?

5. Resumption and termination

It’s crucial to regulate:

• What happens when the force majeure situation ends
• How communication takes place
• Whether to create a new schedule

Recommendation: Consider force majeure already in tenders and bids

Many companies today use standard terms and conditions that are not sufficiently adapted to new risks. This is especially true in international contracts, where force majeure events are far more likely – and more complex. In the tendering and bidding phase, you should therefore:

• Clarify risk allocation and discuss the force majeure clause openly
• Tailor the clause to the industry and delivery – including supply risks, commodity markets and geopolitics

Coordinate with insurance and compliance – many events require internal handling in addition to legal

Closing

Even in times of increasing uncertainty, courts are reluctant to set aside contracts based on changing circumstances. This makes it even more important for companies to think proactively and incorporate clear, relevant force majeure clauses into their contracts. This can provide greater predictability and avoid costly conflicts – even when the world is changing rapidly.

Does your company need to review its standard terms and conditions or get advice on specific clauses? At SAAF, we can help you create robust and commercially relevant contractual clauses adapted to your business model and risk profile.