DIVINE INTERVENTION AND CONSTRUCTION CONTRACTS : THE EXTENT OF COVERAGE UNDER FORCE MAJEURE CLAUSE

Abstract

Contractors could rely upon force majeure clause to reduce their liability if their contractual obligations were disrupted by an act of God. However, a universal definition of the clause is absent, therefore it is difficult to determine with certainty whether an event falls under the coverage of the clause, unless it is expressively listed as a force majeure event. Force majeure would only be valid if it is included in the contract and to include a list which encompasses all events is impossible, as unprecedented risks continue to emerge. Hence, a definition which allows the coverage of these new risks is crucial. Standard forms of contract commonly used in the industry were studied to examine their coverage of force majeure clause. Specifically, a comparison of local forms and international forms were conducted to identify potential area of improvements. Further, force majeure related grounds for extension of time were also examined. In comparison, the coverage for local forms is wider in variety but narrower in scope. The two events, examined as case studies, namely SARS and Indonesia sand ban, would more likely be recognised as force majeure events in international forms than in local forms. Despite this, questionnaire result shows that the industry is generally comfortable with the coverage of local forms. This may be because of the low occurrences of act of God in Singapore till date. A definition with wider coverage is recommended to be included in the local forms of contract.