In March 2024 a factory in Taizhou, Zhejiang, that builds hydraulic presses took an order for a buyer in Brazil. The contract value was USD 280,000, with delivery set for the end of July. Liu, the manager handling the deal, had run the numbers: from sourcing materials to loading the vessel normally takes 90 days, and there was a 40-day buffer built in. Nobody expected that in mid-July the Port of Ningbo would be sealed off at short notice after extreme weather combined with an operational reshuffle. Trucks could not get containers into the terminal, and the sailing dates kept slipping. The buyer waited until August 20 and then sent a claim letter. Under the late-delivery penalty clause the rate was 0.5% per day; 21 days late works out to 10.5%, close to USD 30,000.
Liu pulled the contract and found the clause: "in case of force majeure, the parties shall negotiate a solution." That was all. No definition, no notice deadline, no documentary evidence requirement, and no point at which either side could terminate. The lawyer put it in one line: the shorter the clause, the louder the fight when something goes wrong. The dispute dragged on for almost a year, the legal fees ran into tens of thousands of yuan, and the customer was lost for good. A hydraulic press maker gave up a South American account over half a sentence.
Force majeure is the section of an export contract that gets fudged most often. Sales staff copy a template, the legal team has no time to rewrite it line by line, and what is left is an empty phrase. Only when a real disruption lands, a port sealing off, a ban, a war, a pandemic, do you discover that the phrase cannot hold. What follows takes the problem apart in order: how to prove the three elements, how to draft the clause, how to handle notice and evidence, how to adjust liquidated damages and deposits, and where the line runs between force majeure, changed circumstances and price-adjustment clauses.
The Three Elements Are Not Slogans, They Must Be Backed by Evidence
Article 180 of the Civil Code of the People's Republic of China states it plainly: force majeure is an objective circumstance that is unforeseeable, unavoidable and insurmountable; a person who cannot perform a civil obligation because of force majeure does not bear civil liability, unless the law provides otherwise. That article defines the nature of the thing, and all three elements must be present. Article 590 then fills in the consequences and the collateral duties: where a party cannot perform a contract due to force majeure, it is exempted from liability in part or in full according to the impact of the event, unless the law provides otherwise; and the party that cannot perform because of force majeure must promptly notify the other side to mitigate the loss that may be caused, and must provide proof within a reasonable time.
Read the two together and you see that the exemption is not automatic. It hangs on two conditions: prompt notice and proof within a reasonable time. Miss either one and the exemption is discounted.
"Unforeseeable" is judged at the moment the contract is concluded, from the standpoint of an ordinary reasonable person. Typhoons, earthquakes, wars and sudden government bans generally qualify. But a rainy season that returns every summer, or port maintenance that was announced well in advance, will not convince a judge. Put simply, a risk you could have anticipated in advance is not force majeure.
"Unavoidable" looks at whether the party exercised reasonable care and effort and still could not dodge the event. If a documentation clerk knew the destination country was about to close its border and still pushed through the old process, it is very hard to later hide behind force majeure. The court will ask one question: did you do what any normally prudent exporter would have done?
"Insurmountable" is the hardest of the three. It does not mean you could not think of a workaround; it means that, objectively, no reasonable means could have allowed performance. If the factory could plainly have shipped from Shanghai or Shenzhen, only at a higher freight cost and with a longer booking queue, then the event is not insurmountable. A rise in cost is a commercial risk, not force majeure. This is precisely where many companies stumble.
When you present evidence, each of the three elements must be nailed down with proof. Leave one out and your claim for exemption hangs in mid-air. A common mistake is to submit a single news report about a storm or a strike and consider the job done. A judge will not accept that. What you need to prove is a complete chain: the event really happened, it directly made timely performance impossible, and you exhausted every reasonable route and still had no way out. Break one link and the whole claim fails.
One more point is frequently overlooked: causation. If the port was sealed off that week, but your goods never entered production two months earlier because the buyer had not approved the drawings, then the shutdown did not cause your delay. Do not dress up your own weak capacity or chaotic internal scheduling as force majeure; the law will not buy it.
The same typhoon may be force majeure for one factory and not for another. If factory A sits on the coast and its cargo must move along the affected route, it may qualify; if factory B moved its goods inland a week earlier and rerouted them by rail, the argument is far weaker. A court looks at this specific party and this specific transaction; it does not reduce the event to a label. Your evidence therefore has to track the deal itself: the order, the production schedule, the route. Lose one link and the reasoning is hollow.
Timing gets overlooked too. Whether an event was foreseeable is judged at the moment the contract was signed, not at the moment it happened. Learning more afterwards does not let anyone argue in hindsight that it should have been foreseen; equally, clear warning signals that existed before signing and were ignored cannot be called unforeseeable.
The evidence list is roughly this: official proof of the event, your notice exchanges with the other side, records of the alternative delivery routes you tried, receipts for the costs you incurred to mitigate, and the production and logistics milestones that show causation. Map them one by one onto the three elements instead of dumping everything on the judge at once, which only buries the point.
An honest observation: the proportion of cases in which a court actually finds force majeure is not high. Most companies that lose are not defeated because the event was too small, but because the process was left incomplete. Notice arrived late, evidence was scattered, mitigation was never done. Making those three things routine beats scrambling for contacts after the fact.
How to Draft the Clause: List Everything First, Then Add the Catch-All
The problem with a half-sentence clause is not the wording; it is the structure. A clause that actually works must cover at least the following five blocks. Whichever block you leave out is the block you will be fighting over when something goes wrong.
The first block is the definition. Do not write merely the two words "force majeure." List specific events and add a catch-all phrase to cover what the list misses. The list draws the boundary; the catch-all stops unforeseen events from slipping through.
A sample clause can read like this: for the purpose of this section, force majeure means an objective circumstance that the parties could not foresee, avoid or surmount when the contract was concluded, including but not limited to natural disasters (earthquakes, typhoons, floods, tsunamis and the like), war, armed conflict, terrorist attacks, strikes, epidemics, government acts (expropriation, bans, import and export controls and the like), and any other force majeure event confirmed in writing by both parties.
If the buyer is in Europe or North America, a bilingual clause is worth having, so that the translation of a phrase like "government acts" does not later become a point of dispute. English drafts commonly close that gap with acts of government, governmental action or compliance with governmental orders, catching expropriation, bans and import and export controls in the same net.
The second block is notice. Fix a clear number of days, for example within 7 days of becoming aware, and require written notice by email plus registered mail, or through an electronic system agreed by both sides. The notice should state what the event is, when it began, which obligations it affects and how long it is expected to last.
Setting the notice period also depends on how fast you can realistically respond. If you are a domestic factory and the official document is three days away, a short window is fine; but if you need an overseas association to certify the facts, even seven days may not be enough. Set the period too short and you breach it first; set it too long and the other side may go elsewhere to place its order. As a practical matter, 7 to 15 days is the usual range.
The third block is proof. Provide that the other side may require supporting documents, and specify what kind of institution issues them and within what period they must be submitted. In export practice the document most often used is the factual force majeure certificate issued by the China Council for the Promotion of International Trade (CCPIT).
The fourth block is mitigation and termination. State that both sides must use their best efforts to reduce the loss, and add a sentence: if the force majeure continues beyond a fixed period, 60 days for instance, either party may terminate the contract by written notice, and how sums paid but not yet delivered are to be refunded must also be spelled out.
The fifth block is the boundary. Explicitly exclude ordinary commercial risks, such as sharp currency swings, tariff changes, freight spikes and raw-material price rises, from force majeure. Those belong either in a price-adjustment clause or under changed circumstances, and they must not be dumped into the force majeure basket.
How the account is settled after termination should be written down in advance as well. Money received but not shipped, materials and production costs already incurred, and cargo still in transit: who bears what and by what formula should be stated in one clean sentence. Otherwise force majeure may end the contract but not the outstanding bill.
Fill in all five blocks and the clause will stand. A template is not something to copy blindly; it is something to check against your own transaction, line by line.
Notice and Proof: Get the Timing Wrong and Liability Still Lands on You
The words "shall promptly notify" in Article 590 are not a courtesy; they are a hard duty. Many companies assume that a big enough event exempts them automatically, then end up bearing the very loss they could have prevented because their notice came late. The logic is simple: the earlier the other side knows, the earlier it can find alternative supply, resell the goods or adjust its downstream schedule. If you stay silent, the loss that grows out of that silence is yours to pay.
The "reasonable time" for providing proof must be read against the nature of the event. For public information such as a port shutdown, an official or industry-association statement can be obtained within days; for war or a coup, it may take an embassy, consulate or chamber of commerce to certify the facts. Either way, you cannot wait until the hearing to produce it.
The CCPIT factual force majeure certificate is the third-party proof most commonly used in export circles. It certifies a fact: that a given event, such as a port closure, a control measure or a work stoppage, really occurred in a given place at a given time. It does not decide the legal consequence for you, and it does not guarantee that a court or arbitral tribunal will accept it. Obtaining it is the first step in proving your case, not the end of it.
What does it take to apply for a CCPIT certificate? Usually an application form, a business licence, the contract, and materials that establish the event, such as government notices, port announcements and press reports. The processing time depends on how complex the event is, from a few days to two or three weeks. For a large or time-critical order, start the process the moment the event occurs rather than waiting for the buyer to press you.
Another common trap is sending notice to an individual rather than to the address the contract designates for notice. A contract normally names the email address or address to which notice must be given, and a message sent to the boss's private chat can be denied as never received. To be safe, route important notices through both the agreed email address and physical courier, on parallel tracks.
If the contract is governed by the United Nations Convention on Contracts for the International Sale of Goods (CISG), Article 79 has its own say on exemption: a party is not liable for a failure to perform if it proves that the failure was due to an impediment beyond its control that it could not reasonably have taken into account when the contract was concluded and whose consequences it could not have avoided or overcome; and the non-performing party must give notice, failing which it is liable for the loss resulting from the other side not receiving that notice. Article 79 of the CISG is not identical to domestic law: it speaks of an impediment, which is a little broader than force majeure, but the notice duty is just as strict.
Liquidated Damages and Deposits: However Harsh, They Can Be Cut Down
Liquidated damages are not set in stone just because the number is written down. Article 585 of the Civil Code is clear: where the agreed liquidated damages are excessively higher than the loss actually caused, a party may request the people's court or an arbitral institution to reduce them appropriately; where they are lower than the loss, a party may request an increase. In judicial practice, an amount exceeding the actual loss by 30% is usually treated as a reference point for "excessively high." It is not a rigid rule, but it is a very common landing spot.
Back to the case in the opening. The late-delivery penalty was 0.5% per day, so 21 days late is roughly 10.5%. If the Brazilian buyer's actual loss, say the price difference on a resale or a claim from its own customer, was well below that figure, the factory could certainly have asked for a reduction. But the factory failed even to prove force majeure, and the penalty was held over it by the buyer, so it took hits from both sides.
The deposit rule is even easier to get wrong. Articles 586 to 588 address three things: a deposit contract is formed when the deposit is actually delivered; the deposit may not exceed 20% of the value of the main contract, and any amount above that does not have the effect of a deposit; and, most importantly, liquidated damages and a deposit claim cannot both be enforced in full, so the aggrieved party must choose one. If the other side wants both the liquidated damages and a double refund of the deposit, you can push back with confidence.
A concrete figure: on a contract of USD 280,000, the deposit can be recognized up to USD 56,000. If the other side took USD 80,000 as a deposit, the excess of USD 24,000 does not have the effect of a deposit and can at most be treated as an advance payment.
There is a pragmatic angle too: structure the liquidated damages as a step scale or with a cap. The rate might be 0.5% per day, for example, but the total no more than 10% of the contract value. A cap gives both sides clarity, and when trouble comes it is easier to defend as reasonable, so it is unlikely to be cut in full or struck down as excessive.
Do Not Shove Commercial Risk Into Force Majeure: The Line With Changed Circumstances and Price Adjustment
How the exchange rate moves, how tariffs shift, how freight rises, how materials get more expensive: these are the variables every exporter faces daily, yet most of them are not force majeure, because the "unforeseeable" element usually fails. These risks are part of the market itself, and a professional exporter is expected to anticipate them and have a plan.
Two tools are correct for handling such volatility. One is a price-adjustment clause: agree that when freight, raw materials or the exchange rate move beyond a certain band, 5% say, the price is renegotiated under a formula. Writing the variable into the contract is far cleaner than arguing about it after the event. The other is changed circumstances, the logic of Article 533: if a major change in the underlying conditions after the contract was formed was unforeseeable when the parties contracted, and continued performance would be manifestly unfair, a party may request a modification or termination. Its threshold differs from force majeure and its conditions are strict, so do not expect to invoke it casually.
Two pitfalls remain to be skirted. First, a contract cannot agree to treat a party's own fault or lack of capacity as force majeure. Writing it in will not help, because the three elements themselves rule out subjective fault. Second, "a change in government policy" must be examined closely: is it an abstract administrative act, or a measure aimed at this particular transaction? Nationwide, general policy shifts usually do not qualify as unforeseeable; only bans or controls aimed at a specific industry or a specific transaction are more likely to be recognized.
One more practical rule of thumb. The most stable contract splits the two ideas cleanly: how the price changes, and when liability is excused. Movement within a set band goes to price adjustment; only movement beyond a much more extreme level, supported by official proof, opens the discussion of force majeure or changed circumstances. Each line governs its own stretch, and the two tangle far less often.
When Trouble Actually Hits: A Few Practical Tips for Arbitration and Litigation
Keep evidence along a timeline; do not wait until a lawyer asks before digging it up. Public announcements of the event, official documents, news screenshots with timestamps, notices from the port or the shipping line, and the emails you exchanged should all go into one folder from day one. The timestamp is the thing most easily challenged, so pin it down as early as possible.
Do not give notice orally. Send an email and back it up with registered mail or courier, and keep the delivery records. Put the event, its impact, the expected duration and the mitigation steps you will take into the email. Even if the other side does not reply, that record will later be your protective charm.
Take the initiative on mitigation. Switching ports, splitting deliveries, negotiating an extension, finding alternative supply: keep a record of any reasonable effort that reduces the other side's loss. This not only stands up in law; in real negotiation it also softens the other side's need to press the claim.
Decide the dispute-resolution venue in advance. Arbitration or litigation, in which country, under which law: these should be fixed the moment the contract is written. Discovering only after a problem arises that the clause points to a court in the other side's home country leaves you on the back foot. In a cross-border contract, agreeing on a neutral arbitral institution, such as the China International Economic and Trade Arbitration Commission (CIETAC) or an institution in Singapore or Hong Kong, is usually more practical than gambling on an unfamiliar court.
How you name files matters as well. Put the date, the party and the subject into the filename, such as a scanned port shutdown notice from the shipping line. When the day comes to hand over evidence, a tidy, ordered list beats a pile of random screenshots.
One thing deserves to be said plainly: force majeure is not a universal shield. It covers a failure to perform caused by disaster or upheaval; it does not cover a failure caused by your own inability to perform. Get that straight and the clause can be drafted in good faith, and your position at the negotiating table will hold.
A final honest word: drafting a clause in detail is not about winning a lawsuit in the future; it is about letting the other side know you are not a soft target. Most claims are talked out of existence on paper. Had Liu's half-sentence been written out in full that year, the buyer's claim letter might well never have been sent at all.
Frequently Asked Questions
Is it acceptable to write the force majeure clause as simply "the parties shall negotiate a solution"?
No, that phrasing amounts to writing nothing at all. It defines no force majeure event, sets no notice deadline, requires no supporting documents and says nothing about the duty to mitigate. When a real disruption hits, the two sides argue over whether the event qualifies, who must prove it and how the loss is shared, and the dispute ends up in court. A clause that works has to fill in five blocks: a definition with specific examples plus a catch-all, a notice provision, an evidence requirement, mitigation and termination triggers, and an explicit carve-out that keeps ordinary commercial risk out of force majeure. Only then does it stand up, and only then can it talk a counterparty out of pressing a claim at the negotiating table.
If a port shutdown stops me from delivering on time, am I automatically excused from liability?
No. Exemption is not automatic; it depends on whether all three elements and the collateral duties are satisfied. You must show that the shutdown occurred after the contract was concluded, that it was unforeseeable by the standard of a reasonable person, and that even after reasonable efforts you could not perform through another port or method. You must also notify the other side promptly and provide proof within a reasonable time, for example the factual force majeure certificate issued by the China Council for the Promotion of International Trade (CCPIT). Miss any one link and you may still bear part or all of the liability. The causal chain must also hold together: the event must be what actually caused your failure to perform.
If the liquidated damages rate in the contract is too high, can I ask for a reduction?
Yes. Under Article 585 of the Civil Code, where the agreed liquidated damages are excessively higher than the loss actually caused, a party may request the people's court or an arbitral institution to reduce them appropriately; conversely, where they are lower than the loss, a party may request an increase. In judicial practice, an amount exceeding the actual loss by 30% is usually treated as a reference point for excessiveness. It is not a rigid rule, but it is a common landing spot. So when the other side opens with 0.5% per day, do not simply accept it: first work out what its actual loss really is, and then decide how to negotiate.
Can the other side claim both liquidated damages and a double refund of the deposit at the same time?
Not in full. Articles 586 to 588 of the Civil Code provide that a deposit contract is formed when the deposit is actually delivered, that the deposit may not exceed 20% of the value of the main contract, and that any amount above that does not have the effect of a deposit. More importantly, liquidated damages and a deposit claim cannot both be enforced in full; the aggrieved party must choose one. Take a contract of USD 280,000: the deposit cap is USD 56,000. If the other side took USD 80,000, the excess of USD 24,000 does not have the effect of a deposit and can only be treated as an advance payment. Work that arithmetic out carefully before you concede anything in the negotiation.