Introduction

The Nigerian construction industry operates in a dynamic and often unpredictable economic environment. Recent policy shifts, such as the removal of fuel subsidies, have introduced new financial and operational challenges for contractors, developers, and stakeholders.

In such scenarios, force majeure and hardship clauses become critical legal tools that can mitigate risks and protect contractual obligations.

This article explores the legal interpretations of these clauses, their applicability in the Nigerian construction sector, and real-world case studies that highlight their significance. By understanding these mechanisms, quantity surveyors (QS) and project managers can better navigate contractual disputes and ensure project viability.

1. Understanding Force Majeure in Construction Contracts

Definition and Scope

Force majeure refers to unforeseeable events beyond a party’s control that prevent the fulfillment of contractual obligations.

Common examples include:

• Natural disasters (floods, earthquakes)

• Government actions (policy changes, regulatory shifts)

• Economic crises (currency devaluation, fuel subsidy removal)

Legal Framework in Nigeria

The Nigerian Contract Act and common law principles govern force majeure clauses. Courts typically assess:

• Unforeseeability – Whether the event was reasonably anticipated

• Irresistibility – Whether the party could have mitigated the impact

• Immediacy – Whether the event directly affected contract performance

Case Study: Fuel Subsidy Removal and Construction Delays

The 2023 fuel subsidy removal led to a surge in transportation and material costs, disrupting supply chains.

In a Lagos High Court case (2023), a contractor successfully invoked force majeure due to fuel price hikes, arguing that the policy change was unforeseeable and severely impacted project timelines.

2. Hardship Clauses: A Safety Net for Contractors

Definition and Application

Hardship clauses allow parties to renegotiate contracts when unforeseen circumstances make performance excessively onerous.

Unlike force majeure, hardship does not necessarily excuse non-performance but may justify contractual adjustments.

Key Considerations in Nigerian Contracts

• Material Change in Circumstances – Must be significant (e.g., inflation, policy shifts)

• Good Faith Negotiation – Parties must engage in reasonable discussions

• Judicial Precedents – Nigerian courts have upheld hardship claims in cases of extreme economic instability

Case Study: Inflation and Construction Cost Escalation

A 2022 case involving a Federal Ministry of Works project saw a contractor claim hardship due to rising cement prices.

The court ruled in favor of renegotiation, citing the Nigerian Construction Industry Council (NCIC) guidelines on cost adjustments.

3. Fuel Subsidy Removal: A Case Study in Contractual Disputes

Impact on Construction Costs

The removal of fuel subsidies led to:

• Increased fuel prices (affecting transportation and machinery costs)

• Higher material costs (due to supply chain disruptions)

• Labor cost inflation (as workers demanded higher wages)

Contractual Responses

• Force Majeure Claims – Contractors argued that the policy change was unforeseeable.

• Hardship Adjustments – Some contracts were renegotiated to reflect new cost realities.

• Dispute Resolution – Arbitration and litigation became common as parties disagreed on liability.

Lessons for Future Contracts

• Explicit Force Majeure Definitions – Clearly outline policy changes as qualifying events.

• Indexation Clauses – Link payments to inflation or fuel price indices.

• Dispute Resolution Mechanisms – Include mediation clauses to avoid lengthy litigation.

4. Best Practices for Quantity Surveyors (QS) in Risk Management

Contract Drafting and Review

• Incorporate Clear Force Majeure and Hardship Clauses – Define triggers and remedies.

• Use Industry Standards – Align with FIDIC, JCT, or NCIC guidelines.

• Include Cost Escalation Provisions – Protect against inflationary shocks.

Documentation and Evidence Collection

• Maintain Records of Disruptions – Fuel price changes, supply chain delays, etc.

• Engage Legal Experts Early – Consult lawyers to assess contractual rights.

Alternative Dispute Resolution (ADR)

• Mediation and Arbitration – Faster and more cost-effective than litigation.

• Negotiation Strategies – Seek win-win solutions to avoid project abandonment.

Conclusion

The Nigerian construction industry must adapt to economic and policy shifts by leveraging force majeure and hardship clauses.

The fuel subsidy removal serves as a critical case study, demonstrating how unforeseen events can disrupt contracts.

For QS professionals, proactive risk management—through robust contract drafting, evidence-based claims, and ADR—is essential to safeguarding project success.

By integrating these legal tools into practice, stakeholders can navigate uncertainties while ensuring contractual fairness and project sustainability.

Final Thoughts

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