Force Majeure and Covid-19: A Guide for Suppliers in the Garment Industry

Image: Getty Images

Due to the global Covid-19 pandemic, many Western retailers have cancelled orders, demanded discounts and in some cases refused to pay for orders already completed. These cancellations have had a devastating effect on garment workers in global supply chains – effectively abandoning some of the world’s most vulnerable workers.

Brands have justified their actions by claiming that Covid-19 constitutes an event of force majeure. But what is force majeure? Does it apply in this case? And what legal rights does a supplier have if a brand cancels or refuses to pay on this basis?

Working in partnership with Traidcraft Exchange, The Circle is proud to publish a briefing for suppliers on force majeure.

The briefing provides background to the meaning and application of force majeure and highlights steps suppliers can take in their negotiations with brands and retailers when force majeure is used to renege on a contract or purchasing order.

Read the full briefing here: Force Majeure and Covid-19: A Guide for Suppliers in the Garment Industry

 
Early indications (from April) estimated a total of £20 billion of orders worldwide had been cancelled, although this figure may now be lower as some brands have backtracked due to public pressure. Industry insiders estimate 60 million garment workers will struggle to weather the crisis as many go without pay and face being fired.

“As far as buyers are concerned, there has never been any real room for negotiations,” according to one major garment supplier in India. And yet, as noted by the briefing:

“…a brand cannot rely on force majeure to get out of a contract that is merely difficult or less profitable. Force majeure is not a cure for a contract that is no longer practical or economically viable for a brand or retailer.”

 
Brands must take responsibility – to stand by their contracts, their suppliers, and the global multitude of workers who have helped generate their profits over these last decades.

 

Image: Fabeha Monir for The New York Times