There are certain events outside either party's control that could prevent one of the parties being able to comply with a material element of its obligations under the Contract. This category of Force Majeure events could include scenarios where the Contractor is unable to provide some or all of the Services. The Contract will set out what happens in such a scenario in terms of the Contractor's obligation to provide the services, the Authority's obligation to pay for the service and the termination rights of each party.
Under the WIDP Contract (Clause 69) the Authority is not entitled to terminate for Contractor Default but is entitled to all the adjustment and deductions that would normally apply without the Force Majeure event. Both parties are obliged to use reasonable endeavours to mitigate any delay and the Contractor has to follow Good Industry Practice to minimise the impact.
The parties are required to consult to see if they can agree a way to facilitate the continued performance of the Contract. If this is not successful after a specified period and the Force Majeure is ongoing then either party can terminate the Contract. Compensation is payable by the Authority which also has the option to require the Contractor to transfer the facilities to the Authority (see Section 8.6).
If the Contractor exercises its right to terminate the Authority has a limited period in which it can notify the Contractor it requires the Contractor to continue to provide the services as far as it is possible to do so in the circumstances. If it goes down this route then the Authority has to pay the Unitary Charge as if the services were being fully provided and compensate the Contractor for loss of Third Party Income (in accordance with paragraph 6 of Schedule 19).
By definition the Force Majeure clauses will only apply in very limited circumstances. Under the WIDP Contract (Schedule 1) the definition is limited to war, terrorism, nuclear, chemical or biological contamination (not caused by the Contractor) and pressure waves caused by supersonic devices. As these events are likely to have a wider impact on the Authority than the provision of waste disposal services there is a broader issue as to how the Authority plans to maintain business continuity in exceptional adverse conditions.
The Contract Management Manual should therefore include appropriate cross references to the Authority's business continuity procedures. It should highlight the need to seek input from the Legal Department as soon as it appears a possibility that an event of Force Majeure has happened or will happen.
The WIDP Contract (Schedule 26, paragraph 3.5) provides that if planning permission has not been achieved, and the Contractor has used All Reasonable Endeavours in trying to achieve planning permission, then the Contract shall be terminated on the basis that a Force Majeure Event has occurred.