Costs double. The rupee moves sharply. An import is banned. A port closes. A site becomes inaccessible.
The question every affected party asks is the same: am I still bound? In Pakistani law the answer usually depends on what the contract says — and, where it says nothing, the default position is far less forgiving than parties expect.
Force majeure is a creature of contract
There is no general statutory doctrine of force majeure. If your contract has a clause, that clause governs. If it does not, you are left with the narrow doctrine of frustration.
A clause worth having specifies:
The events, listed and closed or open-ended — natural disasters, war and civil unrest, epidemics, strikes, government action, embargoes, failure of utilities. A list drafted before 2020 that does not mention epidemics or government restrictions is a list worth revisiting.
The test. Typically that performance is prevented, hindered or delayed, and that the event was beyond reasonable control, unforeseeable, and its consequences unavoidable. "Prevented" is a much higher bar than "hindered" — and it is the word that decides most disputes.
Notice. Almost always a condition: written notice within a stated period, with particulars. Parties lose entitlements they clearly had because they told the other side by telephone and continued working.
The effect. Suspension of obligations, extension of time, allocation of costs during the event, and mitigation duties.
A long-stop. A right to terminate if the event continues beyond a stated period, and what is payable on termination — for work done, materials ordered and demobilisation.
What force majeure is usually not
A price increase. Almost universally, a clause that suspends performance does not relieve a party of the consequences of a contract becoming unprofitable.
Currency devaluation. Pakistani businesses ask about this constantly. Exchange rate movement is a foreseeable commercial risk, and it will rarely excuse performance unless the contract says so.
Your supplier's failure, unless the clause covers supply chain failure and the underlying cause was itself a qualifying event.
Your own lack of funds. Financial difficulty is not force majeure, however genuine.
Frustration, where there is no clause
Section 56 of the Contract Act 1872 provides that a contract to do an act which, after the contract is made, becomes impossible or unlawful becomes void.
The bar is high. The doctrine applies where performance becomes impossible or where the very foundation of the contract is destroyed — not where it becomes harder, slower, or unprofitable. Courts do not rewrite bargains because one side made a bad one.
And the consequence is blunt: the contract ends. There is no suspension, no extension of time, and no adjustment — only the statutory obligation to restore advantages received. That is rarely what a party actually wants, which is precisely why a properly drafted clause matters.
Price escalation claims
The commercially important question, particularly in construction and long-term supply.
With an escalation clause, everything turns on the mechanism: which cost components are indexed, against what published index or basis, at what intervals, with what caps or floors, and what documentation must be submitted. Run the claim strictly according to the clause — notices, timing, records — because escalation claims are refused for procedural failure far more often than for substance.
Without a clause, the routes are narrower and depend on facts:
- Variations — where the scope actually changed, the claim is a variation claim, not an escalation claim, and it is usually the stronger case
- Change in law provisions, where duties, taxes or regulatory requirements changed
- Employer-caused delay, where prolongation costs are recoverable under the contract
- Renegotiation, which is often the realistic answer — and a documented variation agreed now is worth more than a claim argued in three years
For construction specifically, see construction and contractor disputes and government tenders and procurement challenges, where public procurement contracts have their own escalation and variation regimes.
Running a claim properly
Whether it is force majeure, delay or escalation, the same discipline decides it:
- Read the contract first — the clause, the notice provisions, and the deadlines
- Give written notice within the period, with particulars, even if the full quantification is not ready. Late notice is the most common fatal error
- Keep contemporaneous records — site diaries, correspondence, photographs, invoices, evidence of the event and its effect on your work
- Mitigate, and record what you did. A party that made no attempt to source alternatives will be asked why
- Quantify by reference to actual cost and the contractual mechanism, not by applying a percentage
- Keep performing where you can, under protest and with reservation of rights, unless the contract clearly entitles you to stop. Wrongful suspension turns a claimant into a defendant
Drafting for next time
Given how many Pakistani contracts have been tested by currency movement, import restrictions and supply disruption in recent years, these belong in your standard terms:
- A force majeure clause with a modern event list, clear notice mechanics and a long-stop
- A change in law clause covering duties, taxes and regulatory change
- A price adjustment clause for contracts running more than a few months, particularly where inputs are imported
- Currency provisions — the currency of payment, and who bears movement between order and delivery
- A hardship or renegotiation clause, requiring the parties to meet and discuss where a defined threshold is crossed
- Sensible dispute resolution, with arbitration where a foreign party is involved
See the contracts every business should have in writing, drafting an arbitration clause and dealership and distribution agreements.
Do not let the deadline run while you negotiate — see limitation and the deadlines that end claims.
How the firm can help
We advise on whether an event actually triggers a clause and what to do in the notice period, prepare and pursue force majeure, delay and escalation claims, defend claims made against our clients, and negotiate variations where that produces a better outcome than a dispute.
We also draft the clauses that make the next disruption survivable.
See corporate and commercial, or contact the firm — and if a notice period is running, today.