21.3.1.1 As set out in Section 5.4 (Force Majeure Events), the Contract should define the Force Majeure Events that can lead to termination and determine the rights of the relevant parties if this occurs. If a Force Majeure Event occurs and the parties cannot agree a solution within a specified period (6 months is typical), either party is entitled to terminate the Contract with compensation payable to the Contractor as set out in Section 21.3.2 (Compensation on Termination for Force Majeure). The Contract should, however, give the Authority the right to prevent termination by paying the Contractor as if the Service were being fully provided after such period. In such circumstances the Authority should specify a fixed period for which it will make such payment, before reconsidering the situation, so that the Contractor can plan accordingly.
Required drafting is as follows:
21.3 Termination on Force Majeure
This Clause 21.3 shall, in respect of Criminal Damage Events, be subject to paragraphs 2 and 6.2.2 of [Annex 1] (Criminal Damage).
(a) No party shall be entitled to bring a claim for a breach of obligations under the Contract by the other party or incur any liability to the other party for any losses or damages incurred by that other party to the extent that a Force Majeure Event occurs and it is prevented from carrying out obligations by that Force Majeure Event. For the avoidance of doubt (but without prejudice to Clauses 21.3(e) or 21.3(g)), the Authority shall not be entitled to terminate this Agreement for a Contractor Default if such Contractor Default arises from a Force Majeure Event.
(b) Nothing in paragraph (a) above shall affect any entitlement to make deductions or any deductions made as a result of [Section 7 (Price and Payment Mechanism)] in the period during which the Force Majeure Event is subsisting.358
(c) On the occurrence of a Force Majeure Event, the Affected Party shall notify the other party as soon as practicable. The notification shall include details of the Force Majeure Event, including evidence of its effect on the obligations of the Affected Party and any action proposed to mitigate its effect.
(d) As soon as practicable following such notification, the parties shall consult with each other in good faith and use all reasonable endeavours to agree appropriate terms to mitigate the effects of the Force Majeure Event and facilitate the continued performance of the Contract.359
(e) If no such terms are agreed on or before the date falling [120]360 days after the date of the commencement of the Force Majeure Event and such Force Majeure Event is continuing or its consequence remains such that the Affected Party is unable to comply with its obligations under this Contract for a period of more than [180] days, then, subject to paragraph (f) below, either party may terminate the Contract by giving [30] days' written notice to the other party.
(f) If the Contract is terminated under paragraph (e) above or (g) below:
(i) compensation shall be payable by the Authority in accordance with Clause 21.3.2 (Compensation on Termination for Force Majeure); and
(ii) the Authority may require the Contractor to transfer its title, interest and rights in and to any Assets to the Authority.
(g) If the Contractor gives notice to the Authority under paragraph (e) above that it wishes to terminate the Contract, then the Authority has the option either to accept such notice or to respond in writing on or before the date falling [10] days after the date of its receipt stating that it requires the Contract to continue. If the Authority gives the Contractor such notice, then:
(i) the Authority shall pay to the Contractor the Unitary Charge361 from the day after the date on which the Contract would have terminated under paragraph (e) as if the Service was being fully provided;362 and
(ii) the Contract will not terminate until expiry of written notice (of at least [30] days) from the Authority to the Contractor that it wishes the Contract to terminate.
(h) The parties shall at all times following the occurrence of a Force Majeure Event use all reasonable endeavours to prevent and mitigate the effects of any delay and the Contractor shall at all times during which a Force Majeure Event is subsisting take all steps in accordance with industry good practice to overcome or minimise the consequences of the Force Majeure Event.
(i) The Affected Party shall notify the other party as soon as practicable after the Force Majeure Event ceases or no longer causes the Affected Party to be unable to comply with its obligations under this Contract. Following such notification the Contract shall continue to be performed on the terms363 existing immediately prior to the occurrence of the Force Majeure Event.
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358 During the period for which a Force Majeure Event is subsisting, the payment mechanism should operate to ensure that the Contractor is paid only for such of the Service that it performs,
359 These terms may include deciding to suspend the Contract for a period if it is anticipated that the effects of the Force Majeure will be surmountable in time; possibly agreeing to extend the Service Period (and the Planned Service Commencement Date) by the amount of the delay, and/or agreeing that only part of the Services should continue to be provided.
360 These timings are indicative only.
361 That is, without any availability or performance deductions. If only a part of the Service is affected by the Force Majeure Event then this provision only applies to that part of the Unitary Charge.
362 This will be subject to general mitigation obligations.
363 Taking into account the time that has elapsed, when an extension has been agreed.