ENFORCEABILITY OF FORCE MAJEURE CLAUSE IN THE LIGHT OF COVID-19 PANDEMIC

INTRODUCTION

The pandemic Covid-19 that is prevailing nowadays led to situations that made it difficult for the parties to perform the contractual duties that they are obliged to. The two clauses that show a force majeure clause covers a pandemic are including the pandemic in the list of events of force majeure will give more clarity as to whether covid-19 pandemic will affect the clauses or not and if the clauses covered under the force majeure are those that are unforeseeable and not in the control of the parties then in those cases the circumstances that arose due to pandemic can be covered under this. Although it is specified that a party can be free from the Obligations on account of the Covid-19 fact-determination that depends upon the nature of the terms, conditions and kinds of duties that need to be fulfilled.[1]

When relying on the provisions of force majeure, the events of the force majeure should not be foreseen by the parties. Also about the pandemic going on right now in the world, the party opposite to the one who refused to fulfil the obligation on the grounds of unforeseeable situation can claim the fact that the covid-19 pandemic is foreseeable as the SAR outbreak already took place in 2002.

FORCE MAJEURE

The common clause in the contract that frees the parties to the contract from liabilities from the obligations of the contract when a situation arises that is extraordinary or that cannot be predicted by a reasonable person such as war, pandemic, the act of God, crime and thus resulting in making the parties incompetent in towards their duties in respect to the contract.[2]

Force majeure are all those events that are not in control or are those that cannot be predicted. Both the natural and human acts are included under this. In several cases, the courts concluded that for a situation to be termed under the category of force majeure there must be an event that should have changed the rights in such a way that it became impossible for one party to carry out or to fulfil the obligations.

FORCE MAJEURE IN INDIA IN LIGHT OF PANDEMIC

In India force majeure is laid under sections 32(6) and 56(7) of the Contract Act, 1872 and the contract Act of 2010. It also protects the parties from the liability of not fulfilling obligations and duties as it is a provision in the contract on which both the parties have agreed upon.

The reason behind enforcing force majeure clauses is to safeguard the party from the after-effects of not fulfilling the obligations and the duties on its part because of any unpredicted situations. The cases that are arising of not fulfilling the duties due to Covid-19 pandemic in all those cases the court would have to determine specifically keeping in mind the facts and the type of duty that need to be carried out. Judicial officers have to decide that whether the covid-19 pandemic has made the parties not able to fulfil or carry out the required obligations.[3]

APPLICABILITY OF FORCE MAJEURE COVID-19 PANDEMIC

To check the applicability of force majeure in light of Covid-19 the courts need to look upon certain factors such as-

  1. The event that led to non-performance should qualify under the category of force majeure.
  2. The risk that it can also lead to non-performance should be enforceable.
  3. The performance should be impossible.

The court should ensure that whether the event that led to the non-performance of the Obligations or the duties is because of the force majeure that arose because of the Covid-19 pandemic. Although there are certain conditions under which although after qualifying all the above-mentioned situations in the covid-19 situation that particular event cannot be qualified under the category of force majeure events if-

  1. By any chance, the parties have predicted the non-performance of the contract.
  2. If the performance of the event is only difficult to carry but not impossible.
  3. The covid-19 developments that have happened recently have impacted either the outbreak or have constituted the Force majeure.

The party that is claiming the benefit under the force majeure is under the obligation to prove that it did all the possible efforts to avoid the event or at least the effects of the event. This decision depends upon the facts of the case and the type of duty that needs to be fulfilled and hence it is not fixed but keeps on changing from case to case[4]. The remedies are also different like one contract may Provide the spot termination of the contract whereas in others it can be put on hold till the force majeure resolves, in some contracts they can even set a specific period after which they can either terminate the whole contract by issuing a written notice or put it on hold. Also, some contracts can suspend some obligations.

CONCLUSION

Although the clause of force majeure has been enforced by individuals and big business tycoons all around the world, still courts have ruled out certain parameters that need to be considered while giving the benefit of force majeure to any party. It was held in many judgments that the benefit of section 32(27) of the contract act will only be given when there is any clause that leads to the waiver or suspension.

The situation that is prevailing in the times of pandemic with lockdowns, restrictions on movements and suspension of various economic activities is something that no one could predict no matter which contracting party it is or the type of contract. The only thing that can be done now is up to the courts to decide whether a particular contract that contains the provisions of force majeure will cover the restrictions of lockdowns that are imposed by governments all over the world. The need of the hour is instead of putting obligations on the parties and drawing section 32 of the Contract Act we should understand the unpredictable situations and prevailing and exempt the parties from the liabilities that have taken place because of a pandemic.

Author(s) Name: Vaishnavi Singh (Bennett University, Greater Noida)

References:

[1] Cosmos Nike Nwedu,’ The rise of Force Majeure Amid The coronavirus pandemic’ (2021) 61 NRJ 1 < www.jstor.org/stable/26988893 >. Accessed 24 Aug. 2021.

[2] David A. Hoffman and Cathy Hwang,’ The social cost of contract’ (2021) 121 CLR 979 < www.jstor.org/stable/27007634 >. Accessed 24 Aug. 2021.

[3] Guhan Subramanian and Caley Petrucci,’ Deals in the time of pandemic’ (2021) 121 CLR 1405 < www.jstor.org/stable/27033033 > Accessed 24 Aug. 2021

[4] Howard Mann,’ Force Majeure Etc Covid-19′ [2020] IISD 3 < www.jstor.org/stable/resrep2520 > Accessed 24 Aug. 2021.

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