Rising energy costs have affected individuals, with many are anxious about making ends meet. They have also affected businesses who are concerned about cost and whether they can continue to be profitable. Landlords who have rents inclusive of bills are also prone to this concern and some have informed their tenants that their ‘all bills included’ rent is now not to include bills or will include less of them, with no alteration in the rental sum. Landlords are citing ‘force majeure’ as the reason behind this change. But what is force majeure? What if there is no express clause in the contract setting it out? Can tenants dispute this? 

What is force majeure? 

A force majeure clause is a contractual term by which a party may be temporarily excused or discharged from performing the contract, in whole or in part, when an event which was unforeseeable and beyond the control of both parties makes such performance impossible. Force majeure clauses classically include such events war, disease epidemics and storms. Sometimes the actual expression “force majeure” is employed in the contract itself but this is not always the case. As far as English law is concerned the words “force majeure” do not amount to a term in themselves and in the absence of a meaning given to the term by the parties or any legislative definition of the term, it has been up to the courts to determine its meaning and how it should be applied.

There are three key components to the application of a force majeure clause. These are whether a party has been:

• ‘prevented’;
• ‘hindered’; or
• ‘disrupted’

in its ability to perform the contract. Importantly, force majeure clauses typically suspend certain obligations under an agreement temporarily and do not result in a termination of the agreement altogether.

A change in the profitability of the contract or increase in cost of performance is not enough to amount to force majeure. Simply because a contract has become more expensive to perform does not mean that a party has been prevented, hindered or disrupted in its performance.

Absence of express force majeure clause 

A contract may have an express force majeure clause in it, but what about when it doesn’t?

In the absence of an express force majeure clause the doctrine of frustration may apply. It is unusual to see a contract frustrated. A frustrated contract ends automatically and immediately, without any action by the parties, who then have only limited rights to redress. The English and other common law courts apply the doctrine of frustration within narrow limits and it may only be relied on under exceptional circumstances. A mere change in the profitability of a contract or increase in cost to perform the contract will not result in a frustrating event.

A force majeure clause may also be relied upon as evidence that the parties have made express provision for the event which has occurred so that the doctrine of frustration is thereby excluded. In such a case, it is the force majeure clause, not the doctrine of frustration, which will regulate the occurrence of the event.

Can this be fought?

It is unlikely landlords will be able to rely on force majeure clauses, as it is arguable that price rises are foreseeable – even though the percentage increase is significant. Whether an event was unforeseeable is determined by the date at which the tenancy was entered into by the parties. Prior to 24 February 2022, Russia’s invasion of Ukraine or the imposition of new sanctions on Russia were arguably unforeseeable.

The unforeseeable event needs to have rendered performance under the contract impossible or radically different from what was agreed. It is not impossible for the landlord to continue to pay for the bills for their property, it is simply not as commercially viable for them. This is not enough to trigger force majeure. Likewise, it also may not be commercially viable for the tenant to begin paying the bills.

What can a tenant you do?

Check your tenancy agreement – are there any terms relating to force majeure or similar? If not, is there anything that could be an obvious implied term?

If not, then your landlord is not entitled to change your contract and is in potential breach. Contact them and tell them so, alternatively, please contact a member of JMW’s property litigation team on 0345 872 6666 who would be happy to assist.