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Plastics trade body questions suppliers’ use of force majeure

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Plastics trade body questions suppliers’ use of force majeure

Plastics trade body questions suppliers’ use of force majeure
October 19
13:37 2012

IK Industrievereinigung Kunststoffverpackungen, Germany’s plastics packaging trade body, is calling for cooperation that would lead to polymer producers adhering to a stricter legal use of force majeure clauses in their supply contracts

A supplier can invoke a force majeure clause if unforeseen circumstances impact on its ability to deliver against a contract.

Force majeure is a legal term. The Oxford Dictionary definition describes the term as the “unforeseeable circumstances that prevent someone from fulfilling a contract”.

In its latest economic trend survey, IK said its members in Germany predict a further decline in the economy for the fourth quarter of 2012. The IK members’ assessment of the German economy is at its lowest level since the fourth quarter of 2010

Supply shortages

IK said: “Despite this economic downturn, manufacturers of plastics packaging were confronted with strongly increasing raw material prices. Supply shortages occurred regularly, entailing short notice delivery cancellations. Overall, this development was met with little understanding amongst the customers of IK members.”

Force majeure announcements contributed to the tight supply situation, the organisation said. “In this context it must be noted again that the legal basis of many of these announcements is legally debatable.

“The IK therefore invites the European umbrella organizations of plastics producers and converters to develop suitable activities which in the future guarantee an explicit legal orientation when using the term force majeure.”

Frequent polymer price increases “can only be passed on to the market with difficulty”, said IK.

It warned that against this background, the economic survey predicts a “dramatic profit decline” for its members in the fourth quarter of 2012.

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