This clause excuses performance if a government action (like a ban, new law, or permit denial) makes the contract impossible to fulfill. For instance, if a new export regulation suddenly prohibits shipping your product to a country, this clause would free you from the contract. This is important because government actions are genuinely outside your control, and UK and US courts recognize this principle. However, the clause only protects you if the government action was truly unforeseeable when you signed—if the risk was already known or likely, courts won't let you hide behind this excuse.
Accept this clause as reasonable, but define "government action" narrowly to exclude things you could have anticipated. For example, exclude regulatory changes in industries that are heavily regulated (like finance or pharmaceuticals), and exclude tax increases or interest rate changes. Add a requirement that the blocked party must have tried to get a waiver or license from the government before claiming the excuse. ---
Frequently Asked Questions
What does this clause mean in simple terms?
This clause excuses performance if a government action (like a ban, new law, or permit denial) makes the contract impossible to fulfill.
Why should I care about this clause?
For instance, if a new export regulation suddenly prohibits shipping your product to a country, this clause would free you from the contract.
What are my options?
This is important because government actions are genuinely outside your control, and UK and US courts recognize this principle.
How does this affect small businesses?
However, the clause only protects you if the government action was truly unforeseeable when you signed—if the risk was already known or likely, courts won't let you hide behind this excuse.