Strike and lockout – influence on entered agreements and delivery

27 Mar 2018
It is not a secret that there at this moment circulate a twist between the government and the public employees regarding new wage agreements. The public employees threaten to strike and the authority corresponds by portend a lockout. A realization of these threats can have a possible influence on your company’s activities. Therefore, it is important that you know the rules and go through the contractual basis of your agreements.

What happens if the strike or lockout prevents you from delivering goods?

If the lockout becomes a reality, it will take place at the earliest on 10 April 2018. Approximately 440,000 public employees are going to be affected as well as their collaborators, including suppliers to the authority.

Clearly, the strike and lockout put suppliers in a serious situation as it becomes impossible to fulfill a contract if there is no one to deliver to.

In case of a strike and lockout, the question is if suppliers get caught by the regular breach of contract, which is compensation, annulment, proportionally reduction of price and so on. Or if the supplier can protect itself against breach of contract in advance in case of a strike and lockout since the situation is not self-caused.

Reversed, it is also a question whether the supplier is entitled to compensation because it is impossible to deliver. 

Force Majeure

In Danish law a principle of force majeure applies.

Force majeure means that an obligation is prevented from being performed because of for example external events, which, even precautions after standard experiences, could not have ensured fulfilment. Classical examples of these events, is among other things, natural disasters, war, and terror.   

Force majeure is therefore unsuspected events, which a party cannot be held accountable for since the latter could not prevent or hinder the event.

Force majeure is not legally decided upon. Meaning, force majeure is not written directly into the law, but can be agreed upon when the agreement is entered.  

The parties must therefore have agreed upon a clause concerning force majeure in the contract or in their regular conditions before a party can invoke the principle. Additionally, it must be cleared that strikes and lockouts are a part of the clause. Strikes and lockouts are in most cases included but should, just in case, be distinctly agreed upon.

With this, the contract can be the foundation that strikes and lockouts are unpredictable events, which none of the parties can be held responsible for or could have prevented.

When none of the parties involved in the contract are having doubts about the force majeure clause, content and extent, the force majeure clause provides exemption from liability to the committed party in case of strike and lockout. If you deliver or receive deliveries from a public company that are going to be included by the strike or lockout, it is essential to go through the contractual basis.

Lund Elmer Sandager follows the progress of the case closely and is pleased to assist with ensuring you and your company the best way possible in connection to the potential upcoming and comprehensive conflict on the Danish labor market. 

If you have questions to the article or questions in connection to your legal rights during the possible strike and lockout, please contact Partner, Attorney David Frølich at +45 33 300 281 / or Attorney Julie Flindt Rasmussen at +45 33 300 227 /