Ukraine Crisis - Implications For English Law Contracts

• Published date: 07 March 2022
• Law Firm: Mayer Brown
• Author: Mr Miles Robinson, Mark Stefanini and Jonathan Cohen

Introduction

The crisis in Ukraine will increase the pressure on global supply chains, which are already under significant strain as a result of the ongoing impact of COVID.

We anticipate that businesses will need to review their supply contracts urgently to assess the possible impact and whether specific actions are required in order to comply with their contractual obligations and/or protect their position.

Areas of focus

We see the following areas as being central to that review for English law governed contracts:

Force majeure arising from supply disruption:

• Force Majeure clauses generally allow a party affected by an event beyond the control of that party to suspend performance of its obligations without penalty.
• However, the wording of these clauses is critical to understanding how contractual performance is impacted by the force majeure event, as English law does not imply the concept of force majeure into contracts.
• Particular challenges may be faced by parties in the middle of supply chains, on the one hand requiring suppliers to perform while on the other hand needing to argue to customers that performance is impossible or should be delayed.

Price escalation clauses:

• Price escalation clauses contain mechanisms to prevent a contract...