Cross-sector supply chain disruption

Geopolitical instability, including ongoing tensions affecting transit through the Strait of Hormuz, are placing global supply chains under real pressure. Disruption is no longer theoretical: delays, rising costs, shortages of raw materials and difficulty performing contractual obligations are becoming everyday commercial realities.

The Manufacturer has reported (20 April 2026) that the latest survey from the Chartered Institute of Procurement & Supply shows short-term supply chain anxiety has climbed to the highest level recorded to date. The data suggests disruption is now seen as both immediate and entrenched. Price increases of more than 10% are expected in the coming quarter for petroleum, metal ores, mining products, chemicals and chemical products, and shipping and logistics. Pressure is also increasing across rubber and plastics, computers and electronics, fabricated metals and transport equipment. All sectors are/will likely be affected.

Supplier diversification and a shift away from cost-driven models towards securing supply continuity are likely to be priorities for manufacturers and businesses adapting to global trade disruption. So understanding how contracts respond to exceptional events, and how to use those mechanisms effectively, is essential.

In this article we explain how taking a proactive approach to contractual arrangements can facilitate flexibility and resilience for your supply chain.

Responding to supply chain disruption

Whether contracts or common law remedies allow the flexibility to renegotiate, or the ability to terminate, should form an integral part of any business’ assessment of supply chain disruption.

Where events impact contractual performance, prompting default and/or dispute, an understanding of the contract’s and the business’ ability to avoid or mitigate damage will be key.

Force majeure

A force majeure clause may excuse a party from performance where events outside its control prevent it from fulfilling its contractual obligations.

A force majeure clause may have a variety of consequences: enable the parties to terminate the contract altogether; allow the contract or liability under it to be suspended while the force majeure event continues; provide for the adjustment of certain terms as a result of changing economic or market conditions; and/or allow for the extension of contractual deadlines.

However, under English law, force majeure is entirely a creature of contract. If there’s no express clause, there’s no right to rely on force majeure at all.

Even where a clause exists, a party seeking to rely on force majeure will usually need to demonstrate that the relevant event falls squarely within the wording of the clause and is the only cause of the non‑performance. Depending on the wording, a party seeking to rely on a force majeure clause may also need to prove that it has taken all possible or reasonable steps to prevent or mitigate the effect of the force majeure event.

Importantly, English courts won’t lightly conclude that force majeure applies. Minor delays, increased cost or commercial inconvenience will rarely be enough. Notification requirements are also critical: missing a notice deadline can invalidate an otherwise valid force majeure claim.

Frustration and other contractual options

Where no force majeure clause exists, or where the disruption falls outside its scope, businesses may look to the doctrine of frustration. This is a narrow common law route that applies only where performance has become impossible, illegal or radically different from what the parties originally envisaged. The bar is very high, and frustration isn’t available simply because a contract has become more expensive or commercially unattractive.

Contracts may, however, contain alternative mechanisms that could help, such as: material adverse change clauses, price adjustment or hardship provisions, break or termination rights, or dispute resolution clauses.

Identifying and using the right provision can make the difference between preserving a key commercial relationship and triggering an avoidable dispute.

Practical steps you can take now

Given ongoing instability, businesses should consider:

• reviewing existing relationships and contracts across supply chain to understand risk areas and the potential for contractual flexibility
• taking specialist advice as to any force majeure or similar provisions – in particular, ensuring any conditions, notice or evidence requirements are understood and can be complied with
• keeping clear records of disruption, mitigation steps and communications with counterparties
• weighing legal rights against wider commercial and reputational considerations, including whether negotiated solutions may, in some circumstances, be preferable
• checking insurance arrangements, including notification requirements, in case force majeure claims and supply chain disruption affect coverage and/or procedural obligations.

Drafting for resilience in new contracts

Where commercial and supply chain arrangements can be renegotiated or agreed afresh, it’s sensible to proactively future‑proof documentation. That may include:

• precisely defining force majeure events, including geopolitical, sanctions and supply‑route disruption risks
• deciding whether clauses should be exhaustive (to provide certainty) or include carefully drafted ‘catch‑all’ provisions (to provide flexibility)
• including clear consequences, such as suspension, extensions of time or termination rights after defined periods
• aligning terms consistently across supply chains to reduce mismatches and unintended exposure.

Well drafted contracts won’t eliminate risk entirely, but they can materially reduce uncertainty and exposure when disruption occurs.

How we can help

Our specialist Commercial and Commercial Dispute Resolution lawyers have extensive experience advising on:

• force majeure, material adverse change and frustration in the context of geopolitical and global trade disruption
• strategic contract reviews across complex and international supply chains
• negotiating new commercial arrangements for flexibility and resilience
• managing disputes, risk and reputational exposure when performance becomes difficult or contested.

Whether you’re navigating immediate disruption linked to events in the Middle East or geopolitical instability generally, or whether you’re simply looking to strengthen your contracts for the future, we can provide clear, pragmatic advice tailored to your commercial priorities.

Please contact Nick or Paul for more information.