Law and regulation of force majeure in Singapore

No, Singapore has no legislation on force majeure.

Force majeure clauses are no more than a convenient way of referring to contractual terms that the parties have agreed upon to deal with situations affecting the contract that may arise over which the parties have little or no control. Parties seeking to rely on force majeure must define what would constitute a force majeure event within the contract. There is no general rule as to what constitutes a situation of force majeure and it would depend on what the parties have provided for in their contracts [Magenta Resources (S) Pte Ltd v China Resources (S) Pte Ltd [1996] 2 SLR(R) 316 at [60] (upheld on appeal)].

The Singapore courts will give full effect to the intention of the parties in so far as a contractual clause such as a force majeure clause is concerned, in accordance with the principle of freedom of contract [RDC Concrete Pte Ltd v Sato Kogyo [2007] 4 SLR(R) 413 at [54]]. The reading of the scope of force majeure under the relevant contract will take into account any examples of force majeure events listed in the force majeure clause. The more examples that are listed, the wider the interpretation will be [Magenta Resources (S) Pte Ltd v China Resources (S) Pte Ltd [1996] 2 SLR(R) 316 at [63] (upheld on appeal)].

N/A

In Singapore, parties are free to regulate force majeure clauses (please see above).

Under the consumer protection laws and the Unfair Contract Terms Act (Cap 396) (UCTA) in Singapore, parties are required to take into account principles of reasonableness and fairness for force majeure clauses. Force majeure clauses that exclude or limit a business' liability may not be valid if it is considered "unreasonable" or an "unfair practice". Please see our responses below for further details. 

Generally, the party seeking to rely on the force majeure clause would have the burden of proving that the current situation falls within the ambit of the force majeure clause regardless of whether it is defined. Whether the current situation falls within the remit of the force majeure clause also depends on the precise scope and ambit of the clause itself, and this will be determined by the courts through a specific factual inquiry [RDC Concrete Pte Ltd v Sato Kogyo [2007] 4 SLR(R) 413 at [54]].

Further, the party relying on the force majeure clause must take all reasonable steps to avoid the operation of the clause, or mitigate its results, by the exercise of any means reasonably open to it [RDC Concrete Pte Ltd v Sato Kogyo [2007] 4 SLR(R) 413]. 

B2C transactions

Under consumer protection laws in Singapore (such as the Consumer Protection (Fair Trading) Act (Cap 52A) (CPFTA) or the Unfair Contract Terms Act (Cap 396) (UCTA)), force majeure provisions in B2C transactions that exclude or limit a business' liability will not be valid if it is considered "unreasonable" or an "unfair practice". 

This typically means that businesses attempting to rely on force majeure provisions to exclude or limit its liability or to terminate the contract for delay or non-performance may only be able to do so if it is due to circumstances that are truly beyond its reasonable control.

As such, it is not advisable for businesses to provide specific examples of force majeure events that would ordinarily be or is reasonably expected to be within its control. Instead, it is recommended that businesses make clear the steps it would take to avoid any hindrance, disruption or non-performance of its obligations in the B2C transaction. Given that consumers may not always appreciate what "force majeure" means, it is also advisable that businesses adopt wording such as "circumstances beyond its reasonable control" instead in B2C transactions.

B2B transaction

As noted above, there is no legislation on force majeure in Singapore. What would constitute a force majeure event in B2B transactions is typically a matter of bargaining and negotiation between the contracting parties and would have to be defined by the parties. The requirements of reasonableness and fairness in B2C transactions under consumer protection laws in Singapore would not apply. 

Under UCTA in Singapore, force majeure provisions in transactions that are concluded on one party's written standard terms of business may not be valid against the other party unless it satisfies the test of reasonableness in UCTA. Similar to B2C transactions above, where one party attempts to define circumstances that are considered within its reasonable control as force majeure, the courts may consider it unreasonable to exclude or limit its liability and invalidate such a provision. 

In comparison, what would constitute force majeure circumstances in B2B transactions that are not concluded on written standard terms of business is generally up to the contracting parties to negotiate and define. As such, these negotiated terms would generally not be subjected to the reasonableness requirements under UCTA. The courts will, in accordance with the principle of freedom of contract, give full effect to the intention of the contracting parties in respect of a force majeure provision [RDC Concrete Pte Ltd v Sato Kogyo [2007] 4 SLR(R) 413 at [54]].

We would recommend that your force majeure clause at least address the following:

• Initial Notice: to avoid disputes of non-performance or delay, and to allow for an opportunity for parties to discuss alternative methods of performance of contract, it is useful to include a requirement on the party invoking force majeure to provide a written notice to the other party of any force majeure event, providing details of the event, estimated time of delay expected, and the mitigation steps being undertaken.
• Timing: it is recommended to indicate a specific time period after which the agreement will terminate and/or provide the parties with the opportunity to terminate because of the force majeure event. 
• Definition: it is recommended to define clearly in what situations would a force majeure event occur as the courts would interpret a force majeure clause restrictively [RDC Concrete Pte Ltd v Sato Kogyo [2007] 4 SLR(R) 413 at [57] to [69]].
• Reasonableness: a force majeure clause would effectively exclude a party's liability for failure to perform its obligations under the agreement; therefore, such an exclusion of liability clause may be subject to the test of reasonableness under UCTA in Singapore. If the force majeure provision is drafted too wide, it may be construed as unreasonable and rendered void, giving no protection to the party.

No, but it would be advisable for a force majeure clause to define specific events as instances of force majeure with wording like “outbreak of disease”, “epidemic”, “pandemic”, “civil emergency” or similar to capture a situation such as the COVID-19 outbreak. In the event the party wishes to soften the threshold to invoke the force majeure clause, it is also advisable to include words such as “hindrance” or “disruption”, which generally connotes a lower threshold of negativity compared to “prevention” [Holcim (Singapore) v Precise Development [2011] 2 SLR 106]. On the other hand, for any party that wishes to minimise the scope of the force majeure clause, it is advisable to include clear language and level of causal linkage on when the clause can be invoked, e.g. in relation to trade or labour restrictions, travel bans, quarantine requirements or contamination of goods, such that force majeure is not invoked due to an event affecting the country or business environment in general without affecting the counterparty’s ability to perform the contractual obligations.

Although it is acceptable in Singapore for a contract to be silent on what a force majeure event is and simply define force majeure situations as any circumstances beyond a party's reasonable control [RDC Concrete Pte Ltd v Sato Kogyo [2007] 4 SLR(R) 413 at [53]], the party attempting to rely upon the force majeure clause in the contract must prove not only that the current circumstances fall within the clause, but that because of the occurrence of those events he was prevented, delayed, or hindered from performance of his contractual obligations, and that his non-performance was due to circumstances beyond his control. It will not suffice that performance becomes more expensive, but rather show some sort of impossibility on its part in performing its contractual obligations.

If there is no force majeure clause in the contract or if a party is unable to bring itself within the ambit of the force majeure clause, the party may still be excused from performing its contractual obligations if it can invoke the common law doctrine of frustration. The doctrine of frustration may only be relied on under very exceptional circumstances whereby the parties' obligations are so fundamentally or radically altered that the contract can no longer justly be said to be the same as that which was originally entered into by the parties [Glahe International Expo AG v ACS Computer Pte Ltd and another appeal [1999] 1 SLR(R) 945 at [26]]. 

For instance, the Singapore Court of Appeal in Holcim (Singapore) v Precise Development [2011] 2 SLR 106 at [53] observed that a mere increase in cost will not amount to frustration but an astronomical increase in cost, such as an increase by 100 times, might amount to frustration.

A party may also rely on the common law doctrine of repudiatory breach to terminate a contract if there are no other terms in the contract granting the parties rights to terminate the contract (e.g. to terminate for convenience). 

Further, in light of the COVID-19 global pandemic, the Singapore Parliament enacted the COVID-19 (Temporary Measures) Act 2020 (“COVID-19 Act”) to provide temporary and targeted protection to businesses and individuals who are unable to perform certain contractual obligations due to the outbreak situation. Notably, the COVID-19 Act only covers certain types of contracts prescribed by the COVID-19 Act, and these contracts must have been entered into, or renewed, before and inclusive of 24 March 2020.

However, these measures are temporary and will only be in place for the prescribed periods under the COVID-19 Act.  To date, there has been three amendments of the COVID-19 Act, extending the relief period for different categories of covered contracts to 19 November 2020 to as late as 31 March 2021. In addition, the temporary measures set out in the new law do not grant blanket relief for all unperformable contractual obligations. For more information, please see our update on the COVID-19 Act here. Please note that there may be further amendments to the COVID-19 Act in the future.

If you wish to discuss the likely effects of the COVID-19 pandemic on your business, please do not hesitate to approach our key contact listed below.