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Besides access and training in Westlaw or Lexis Nexis, case based research requires excellent drafting skills, a firm grasp of narrative, logical deduction and a sharp memory.

We reproduce below some extracts of case based research where our team drafted out a memo for a UK based customer noting the Recession of 2008 as a Force Majeure event.

The Force Majeure event pleaded by _____ was a valid act of God, beyond commercial loss or impaired profitability, and this can be proven on the facts. The Force Majeure event pleaded by ___, being the Global Recession, and its effect on the consumption of media services, has been widely recorded. Its deepening was noted by the International Monetary Fund’s “World Economic Outlook” for October 2008 – “Over the past year, the global economy has been buffeted by the deepening crisis in financial markets, by major corrections in housing markets in a number of advanced economies, and by surges in commodity prices. Indeed, the financial crisis that erupted in August 2007 after the collapse of the U.S. subprime mortgage market entered a tumultuous new phase in September 2008 that has badly shaken confidence in global financial institutions and markets. Most dramatically, intensifying solvency concerns have triggered a cascading series of bankruptcies, forced mergers, and public interventions in the United States and western Europe, which has resulted in a drastic reshaping of the financial landscape.” –

Chapter 1.

The lingering effects of the Global Recession are further recorded by the International Monetary Fund’s “World Economic Outlook” for April 2010 – “In advanced economies, the tightening of bank lending standards is ending, and the credit crisis appears to be bottoming out. In many emerging and developing economies, credit growth is reaccelerating. Nevertheless, financial conditions remain more difficult than before the crisis. Especially in advanced economies, bank capital is likely to remain a constraint on growth as banks continue to retrench their balance sheets. Sectors that have only limited access to capital markets––consumers and small and medium-size enterprises––are likely to continue to face tight limits on their borrowing. In a few advanced economies, rising public deficits and debt have contributed to a sharp increase in sovereign risk premiums, posing new risks to the recovery.” – Executive Summary at page xiv.

The most pertinent United Kingdom statistics, related to sharp fall in Gross Domestic Product (GDP), and sharp fall in service consumption, are all reproduced below.

GDP Growth – UK (As Per The Office Of National Statistics)

Recession of 2008 – 2009 Compared To Previous Recessions (As Per The Office Of National Statistics)

Fall in Consumption Of Services, Including Media Services (As Per The Office Of National Statistics)

This Global Recession was caused by a breakdown in the international credit market, precipitated by trade in financial instruments called derivatives, centered on high risk mortgages issued to American homeowners also called “Sub Prime Mortgages”. Derivates being new financial instruments, little studied and understood by the international financial community, the credit breakdown precipitated by them was entirely unforeseen, and unforeseeable, by reasonable standards.

The Global Recession thus fulfils the test of being an unforeseen, out-of-reasonable-control vis major, and was a Force Majeure event.

The respondent did not, on careful examination of the Force Majeure clause in the Agreement, assume the risk of this Force Majeure event. As per Tandrin Aviation Holdings Ltd v Aero Toy Store LLC 2010 EWHC40 (Comm), economic hardship could not be ruled out entirely as a Force Majeure event, but would need to be specified in the Force Majeure clause in contention. With respect, Force Majeure clauses routinely rule out performance in the event of war, however, they do not specifically rule out performance for being affected by nuclear fallout, in a war where the party’s country was neutral. The Global Recession, its pervasive impact, the fragility of online media consumption during its pendency, were events as unforeseen as the aforementioned nuclear fallout.

To summarize, ___ had assumed the risk of hardship in the course of normal changes to market conditions affecting profitability. The Global Recession was an unforeseen, abnormal change, which imposed hardships that had never been contemplated by the parties while consenting to the Agreement. It thus bypassed the Tandrin test and excused the performance of the respondent.