Can A Supplier Use Force Majeure For Delivery Delays?

Your supplier has just told you they can't deliver on time. To make things more frustrating, they've pointed to a force majeure clause and said the delay is out of their hands.

If your business was relying on that stock, equipment or materials, this can put you in a tough spot very quickly. You may have customers waiting, staff rostered, marketing already booked, or production dates you can't easily move.

The good news is that a supplier can't always use force majeure as a blanket excuse for a delivery delay. In New Zealand, the answer usually comes down to your contract, what actually caused the delay, and what each side does next.

Can A Supplier Use Force Majeure For Delivery Delays?

Yes, a supplier can use force majeure for a delivery delay if the contract allows it and the delay fits within the clause. They can't simply say force majeure and avoid responsibility without meeting the wording of the contract.

A force majeure clause is a contract term that deals with serious events outside the parties' control. Common examples include natural disasters, government restrictions, war, pandemic restrictions, strikes, port closures, major transport disruption or failures in essential infrastructure.

New Zealand law doesn't automatically give every supplier a force majeure right. The supplier needs a force majeure clause in the contract, purchase order terms, trading terms or other agreement between you.

When you review the clause, look for four things:

• Is the event covered? The clause may list specific events, or it may use broader wording such as events beyond reasonable control.
• Did the event actually cause the delay? There needs to be a real link between the event and the missed delivery date.
• Did the supplier give proper notice? Many clauses require written notice within a certain number of days, with details of the expected delay.
• Did the supplier try to reduce the impact? Most force majeure clauses expect the affected party to take reasonable steps to work around the problem.

For example, a port closure caused by severe weather may be covered. A supplier who overcommitted its warehouse, forgot to order stock or accepted a better-paying customer first may have a much harder time relying on force majeure.

What Should You Do First When A Supplier Misses The Delivery Date?

You should first gather the contract documents, ask for clear written details, and avoid accepting the delay until you've checked your position. What you say in the first few messages can matter later.

Start with the paperwork. Delivery terms are often spread across more than one document, especially if you've been dealing with the supplier for a while.

Collect:

• the signed supplier agreement, if there's one
• the supplier's standard terms and conditions, or terms of trade
• your purchase order and any terms attached to it
• quotes, order confirmations and invoices
• emails or messages discussing delivery dates
• any written updates from the supplier about the delay

Then ask the supplier for specific information. Keep it calm and factual. You might ask:

• what event they say has triggered force majeure
• when the event started
• why it prevents or delays delivery of your specific order
• what steps they've taken to reduce the delay
• the revised delivery date
• whether they can partially deliver, substitute products or source from elsewhere

Keep a record of the business impact as well. If you need to buy replacement stock, pay extra freight, cancel customer orders or postpone work, save the invoices and internal notes. Even if you end up negotiating a practical solution, those records help you have a more informed conversation.

Try not to make threats or overstate your position. A short message asking for details and reserving your rights is usually safer than sending an emotional response when you're under pressure.

What Does Your Contract Say About Late Delivery?

Your contract may give you specific rights when delivery is late, and those rights can be more useful than the force majeure clause itself. Delivery terms often decide whether you can cancel, claim costs, withhold payment or require a workaround.

Look closely at the delivery clause. A missed delivery date means different things depending on how the contract is drafted.

Is The Delivery Date Fixed Or Estimated?

If the contract says delivery will occur on 15 March, that may be a stronger obligation than wording like estimated delivery in March or delivery expected around mid-March.

Some contracts also say time is of the essence. That wording can make timing a central part of the deal, especially where late delivery defeats the purpose of the order.

Are There Late Delivery Remedies?

Check whether the contract gives you rights such as:

• liquidated damages for each day or week of delay
• service credits
• a right to cancel if the delay continues beyond a set period
• a right to source replacement goods and recover extra costs
• a right to reject late delivery
• a right to withhold payment until delivery occurs

If the contract already spells out the remedy, that will often be your starting point.

Whose Terms Apply?

This can get messy when your purchase order says one thing and the supplier's terms and conditions say another. For example, your purchase order might require delivery by Friday, while the supplier's standard terms say delivery dates are estimates only.

In New Zealand, this often comes down to contract formation: what terms were offered, accepted and incorporated into the deal. If the documents conflict, get tailored advice before you assume your terms automatically win.

Can You Cancel The Order Or Get Money Back?

It depends on the contract, the seriousness of the delay and whether the supplier is properly covered by the force majeure clause. You may have cancellation rights under the contract or under the Contract and Commercial Law Act 2017, but the facts matter.

Your contract may include an express cancellation or termination right. For example, it might say you can cancel if the supplier doesn't deliver within 10 business days after the delivery date, or if a force majeure event continues for more than 30 days.

If the contract doesn't spell it out, the Contract and Commercial Law Act 2017 may be relevant. In broad terms, cancellation can become available where a term is essential, or where the breach has a serious effect on the benefit you expected to receive or the burden you carry under the contract.

That doesn't mean every late delivery lets you cancel. A one-day delay for non-urgent stationery is very different from a six-week delay for branded packaging you need for a product launch.

The Fair Trading Act 1986 may also matter if the supplier made misleading statements about stock availability, delivery capability or where the goods were coming from. For example, if the supplier said the goods were already in Auckland when they were actually still overseas and not yet manufactured, that could raise Fair Trading Act issues.

The Consumer Guarantees Act 1993 can sometimes apply to business purchases, but many business-to-business contracts contract out of it. Contracting out is generally only allowed where both parties are in trade, the agreement is in writing, and it's fair and reasonable. Check the wording before relying on CGA rights.

If you're thinking about cancelling, be careful. Wrongful cancellation can put your business in breach. Get advice before you cancel a major order, refuse delivery or stop payment, especially if the contract value is significant.

How Should You Negotiate With The Supplier?

You should negotiate from the contract, the facts and your commercial priorities. The goal is often to protect your business quickly, not spend weeks arguing about legal labels.

Start by working out what outcome you actually need. It may be:

• urgent partial delivery
• a firm revised delivery date
• replacement or substitute goods
• air freight instead of sea freight
• a discount or credit
• a refund of your deposit
• permission to source from another supplier without penalty
• clear communication you can pass on to your own customers

Then match your request to the contract. If the clause requires the supplier to mitigate, ask what mitigation steps they've taken. If the contract allows cancellation after 30 days of force majeure, you may be able to use that date as a negotiation point.

A Worked Example

Say Hana runs a cafe group in Wellington. She orders 20,000 branded takeaway cups for a winter campaign at $0.18 per cup, for a total order value of $3,600. The supplier promises delivery by 1 June.

On 29 May, the supplier says a shipping delay means the cups won't arrive until 21 June and points to a force majeure clause covering port disruption. Hana's campaign starts on 5 June, and she needs cups immediately.

Hana checks the contract. It says the supplier must give written notice as soon as reasonably possible, take reasonable steps to minimise the delay, and allow Hana to cancel if delivery is delayed by more than 14 days.

Instead of arguing straight away, Hana asks for proof of the shipping issue, whether a partial delivery is available, and whether the supplier can air freight 5,000 cups. The supplier offers 5,000 cups by air freight at its own cost, the balance by 21 June, and a 10% credit on the order.

That may be a better commercial result than cancelling the whole order and scrambling for unbranded cups, but Hana's position came from knowing the contract before negotiating.

What Clauses Should Your Supply Terms Include For Next Time?

Your supply terms should clearly deal with delivery dates, force majeure notices, mitigation, remedies and cancellation rights. A short, vague clause often leaves too much room for disagreement when something goes wrong.

If your business regularly relies on suppliers, your terms of sale should do more than state the price and product description. It should give you a workable plan for delays.

Here is a simple outline you can use when reviewing or preparing supply terms. This isn't a finished legal document, and a lawyer or legal adviser should tailor the clause drafting before you use it.

1. Parties And Order Process: State who is buying, who is supplying, and how purchase orders are accepted.
2. Goods Or Services: Describe the products, quantities, specifications, quality standards and any approved substitutes.
3. Delivery Dates And Location: Say whether dates are fixed or estimated, where delivery occurs, and who bears freight risk and cost.
4. Force Majeure Events: List the events that count, and say whether general supplier shortages or subcontractor delays are included.
5. Notice Requirements: Require written notice within a set timeframe, with details of the event, expected delay and affected orders.
6. Mitigation Steps: Require the supplier to use reasonable efforts to reduce the delay, including partial delivery or alternative sourcing where practical.
7. Delay Remedies: Set out discounts, credits, replacement sourcing rights or liquidated damages if delivery is late.
8. Cancellation Rights: State when you can cancel, what happens to deposits, and whether you can reject late delivery.
9. Payment And Set-Off: Say when payment is due and whether you can withhold or offset amounts linked to delayed or defective delivery.
10. Records And Updates: Require regular delivery updates and documents proving the cause of any delay.

Templates can be useful for spotting the issues, but they often miss the commercial details that matter to your business. If delivery timing is central to your revenue, the clause should reflect that.

Key Takeaways

• A supplier can only rely on force majeure for a delivery delay if the contract allows it and the event fits the clause.
• Ask for written details, keep records, and check the contract before accepting the supplier's explanation.
• Your delivery clause may give you practical remedies such as cancellation rights, credits, partial delivery or replacement sourcing.
• New Zealand laws such as the Contract and Commercial Law Act 2017, Fair Trading Act 1986 and Consumer Guarantees Act 1993 may affect your options, depending on the facts.
• A calm negotiation based on the contract often leads to a faster commercial solution than arguing over whether the delay is truly force majeure.
• Clear supply terms are one of the best ways to protect your business when delivery timing really matters.

If you'd like help with reviewing your supplier contract, negotiating clearer delivery terms, or preparing supply terms that protect your business, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.