Force Majeure or Farce Majeure?

To:WRC Affiliate Universities and Colleges
From:Scott Nova and Ben Hensler
Date:September 14, 2020
Re:Force Majeure or Farce Majeure?

We write to share two new reports co-researched and co-written by the WRC that address crucial aspects of the pandemic’s impact on the apparel industry and garment workers, including those making university apparel.

As you know, the WRC has tracked extensively how brands and retailers responded to Covid-19 by canceling and refusing to pay for orders that were already in production, fully finished, or even shipped. The result has been a wave of factory closures, job losses, and workers made destitute.

A new report from the Netherlands-based Clean Clothes Campaign,  co-researched by the WRC, Un(der)paid in the Pandemic: An estimate of what the garment industry owes its workers, calculates that, worldwide, garment workers lost three to six billion dollars in wages during the first months of the pandemic, largely due to brands’ cancellation of existing orders.

Many brands and retailers claimed legal justification for refusing to pay suppliers by invoking cancellation clauses in their purchase agreements or declaring a state of force majeure.

A new paper co-authored by the WRC, the European Center for Constitutional and Human Rights, and the ILAW Network, reveals that what purported to be a legitimate exercise of contractual rights by brands has, in many cases, been little more than a poorly disguised money grab—in violation of accepted legal standards for suspending contracts. The report is aptly titled Farce Majeure: How global apparel brands are using the COVID-19 pandemic to stiff suppliers and abandon workers.

The paper contrasts the actual legal doctrine of force majeure, under Anglo-American commercial law, with the way apparel brands have acted during the pandemic. It finds that, in retroactively canceling and refusing to pay for orders, brands have relied far less on legitimate legal justifications than on unconscionably one-sided contracts and the inability of suppliers to hold brands legally accountable.

As the paper relates, both phenomena are symptoms of the asymmetrical power relations that pervade the industry—not only between workers and factory owners but between factory owners and brands. The report finds that brands compel suppliers in the developing world to sign contracts with grossly one-sided cancellation terms, and falsely invoke force majeure, simply because they can—even though courts and commercial partners in their own countries would likely not permit them to do the same.

The paper’s central conclusion: If the apparel industry that emerges from the pandemic is to be less prone to widespread economic devastation in times of trouble, brands and retailers must commit to more responsible terms of purchase.

As always, if you have any questions about this work, please do not hesitate to contact us.