In Ghana, foreign aid impacts education, agriculture and medicine and other vital areas. Aid agencies often depend on funding from high-income countries’ governments to operate. Hence, funding cuts can render NGOs unable to meet their contractual obligations, putting them at legal risk. This essay examines force majeure clauses, the frustration doctrine and alternative options to assist organisations in navigating such circumstances.

The Recent Freeze on Foreign Aid

Since 2025, aid organisations have globally suffered from significant aid cuts. Following the Trump’s administration’s Executive Order 14169[1] which led to a stop work order and the agency’s de facto dissolution, many USAID-funded programmes halted projects and laid off staff.[2] Similarly, the UK government[3] and several Swiss[4] and Swedish[5] aid programmes drastically reduced their overseas fundings.

Force Majeure under Ghanaian Law

Although force majeure is not a separate Ghanaian legal doctrine, courts recognise force majeure in two circumstances. The first is where a contract lists force majeure events in a so-called force majeure clause. Secondly, force majeure may describe an event, interchangeably called “Act of God” or “frustrating event”, that triggers the frustration doctrine, anchored in case law and the Contracts Act 1960 (Act 25).[6]

Unlike force majeure clauses, a frustration claim does not require a contract clause. A frustrating event, unforeseen, outside of the parties’ control and making contract performance impossible or radically different from what was intended,[7] discharges the contract, [8] even in the absence of contractual safeguards.

While force majeure clauses and the frustration doctrine both avert the impact of extraordinary events, they usually diverge in scope, available remedies and procedure.[9] Force majeure events typically cover wars, strikes, pandemics, and natural disasters, although a force majeure clause can widen this scope to include funding shortfall, bad weather and other events. Contrastingly, a frustration claim depends entirely on whether a party is in practical terms restricted from contract performance because of the frustrating event.

Force majeure clauses may also provide flexible remedies unlike frustration. In a force majeure clause, these remedies depend on the parties’ agreed terms and can include temporary suspension, extension, partial performance, termination of obligations or other arrangements. A successful frustration claim, however, automatically discharges the contract for both parties. Procedurally, a force majeure clause may be used to outline a variety of procedural steps, necessary documentation and the like, while a frustration claim necessitates litigation.

Maximising certainty in force majeure contract clauses

A reliable force majeure clause requires good drafting. Ghanaian courts will enforce lawful and public-policy-compliant force majeure clauses. By clarifying unexpected disruptions, they reduce litigation risks. That does not mean litigation cannot happen. In Industrial Park Ghana, the Court of Appeal recognised a force majeure clause in the lease but rejected the Applicant’s attempt to rely on it, since the force majeure event had not occurred.[10]

Boundaries in frustration claims

In frustration, the discharge only applies to the period after the frustrating event, not necessarily to the entire contract.[11] Moreover, Ghanaian courts narrowly define frustration. In the Supreme Court case Barclays Bank v Sakari as well as the High Court case R. T. Briscoe v Essien, the courts emphasised that mere financial difficulty or hardship alone do not qualify as frustrating events.[12]Consequently, NGOs facing aid cuts may struggle to establish frustration, unless the contract explicitly links performance to the funding source.

Practical options beyond force majeure or frustration

As an alternative to invoking a force majeure clause or frustration, parties may also consider the following practical contractual measures.

Renegotiation

Renegotiation requires the parties to reconvene and consider the changed circumstances. The parties may reduce the project scope, adjust timelines, or modify deliverables to reflect revised financial and supply chain conditions. The advantage of renegotiation is that it preserves relationships and continued project delivery where possible, as compared to one party’s outright abandonment of the agreement.[13]

Negotiated early termination

An agreed early termination allows the parties to clarify responsibilities, payments, and deliverables, reducing disputes. This approach lowers litigation and liability risks compared to a unilateral termination.

Force majeure and frustration as a last resort

Where renegotiation fails, a force majeure clause may be invoked if it explicitly covers the event, accompanied by prompt notification and evidence of impact. Frustration, however, remains a limited option, as it requires the impossibility of the intended performance.[14]

Dispute resolution considerations

Dispute resolution clauses should specify a practical and cost-effective arbitration forum, the governing law and procedure, a suitably qualified arbitrator and a mandatory mediation stage prior to arbitration where feasible. They are often governed by Ghana’s Alternative Dispute Resolution Act 2010 (Act 798).[15] Clarity is essential, as ambiguous clauses can create additional disputes. A well-drafted mechanism ensures enforceability, timely resolution and reduces cost.

Conclusion

Precisely drafted force majeure clauses provide flexibility. Frustration is narrowly applied and unlikely to succeed where performance remains objectively feasible.

Organisations should first pursue renegotiation or agreed early termination and reserve the invocation of a force majeure clause or frustration as a last resort.

The recent developments in the global aid sector underline the importance of carefully drafted contracts, including robust force majeure provisions and effective dispute resolution mechanisms.

[1] Executive Order 14169, Reevaluating and Realigning United States Foreign Aid (2025); Reevaluating and Realigning United States Foreign Aid (2025)

[2] AP News ‘USAID cuts are already hitting countries around the world. Here are 20 projects that have closed, AP News (March 2026) https://reliefweb.int/report/west-africa/major-ngo-shuts-operations accessed 10 March 2026.

[3] UK HM Treasury, Autumn Statement and Spending Review: Overseas Development Assistance Allocations (2024).

[4] Swiss Agency for Development and Cooperation, Annual Report 2025.

[5] Swedish International Development Cooperation Agency, Budget Adjustments 2025 (2025).

[6] Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd’s Rep 323.

[7] Matsoukis v Priestman & Co [1915] 1 KB 681; Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd’s Rep 323.

[8] Contracts Act, 1960 (Act 25), s. 1.

[9] Sneha Solanki, ‘Force majeure – Legal glossary’ (Thomson Reuters, 17 Sep 2024) https://legal.thomsonreuters.com/blog/force-majeure/ accessed 6 Oct 2025.

[10] Industrial Park Ghana Limited V National Investment Bank Civil Appeal NO H1/101/2016

[11] Contracts Act, 1960 (Act 25), s. 1.

[12] Barclays Bank (Ghana) Ltd v Sakari [1972] 2 GLR 449; R. T. Briscoe (Ghana) Ltd v Essien [1981] GLR 393.

[13] UNIDROIT Principles 2010, art 6; Norbert Horn (ed), Adaptation and Renegotiation of Contracts in International Trade and Finance (Kluwer 1985).

[14] Taylor v Caldwell (1863) 3 B & S 826.

[15] Alternative Dispute Resolution Act 2010 (Act 798) (Ghana).