• Kakoli Nath

FORCE MAJEURE- AN EXCUSE TO CONTRACTUAL FAILURE IN THE PANDEMIC SITUATION


Focusing on the prevailing situation on the business individuals, suppliers, and manufacturers, where the pandemic has tightened the financial crisis unrolling nationwide and up, roared the stimulus of regaining back the grid to grow. The various business entities who were engaged in contractual obligations are now inquisitive about the Contracts that have not been executed, have been clinging on to the provisions of the Indian Contract Act,1872 where either Section 32 or 56 of the Act could render some justice to these contractually grounded business entities.



WHAT IS ACT OF GOD?


It is an extraordinary interruption by a natural cause (such as Flood, Earthquake, or famine) in the usual course of events or activities recurring in nature, persists till some interval of time, which cannot be prevented or foreseen due to unavoidable circumstances.

Looking into the very commencement of the virus was very fugitive; this also necessitates to know the importance of Force Majeure. Both the terms have the same meaning, but in legal uses, both are different. Where Act of God includes all causes of an inevitable accident to be occasioned by elementary forces of nature not connected with any agency of man or any other effect, can be direct or indirect on the other hand, the definition of Force Majeure is a much broader term which not only includes the natural forces but also includes other causes which may not be related to nature and can be connected to the human agency directly and indirectly, but on whom the humans involved in the accident don't have any control or the inevitable incident.


Considering the situation of pandemic similarly, it was held in the case of Coombs Vs. Nolan1, the Court excused a delay in the discharge of cargo where the defendant could not obtain ample horses to unload the ship on required time due to the horse flu pandemic that time and the horse flu fell within the purview of Act of God.



IS THE OUTBURSTING WAVE OF THE COVID-19 AN ACT OF GOD


It has a very controversial affair to discuss the cause Countries facing economic distress would undoubtedly stress their focus on the deliberate initiative taken by China to escort an economic fall out in the rest of the world. There have been rumors afloat about the awakening pandemic being spread from Wuhan's labs and only being spread in one particular place and no other countries in China. At the very onset of the epidemic, China took acute strict measures and declared complete lockdown. Neither of the citizens was permitted into or outside the country resulting in the containment on in one place. In contrast, many foreigners fled from the country via the country and went to different countries to escape and further contacted many, which resulted in a rapid community spread where one infected person can infect near about 400 people in large.



CAN A FORCE MAJEURE ARISE?


Looking towards the Clause of Force Majeure an Act of God, many issues have been raised where Force Majeure is a contract, where repercussions are present for employees if they would be repudiated.



DOES THE CURRENT PANDEMIC SITUATION QUALIFIES FOR FORCE MAJEURE


There have never been any predefined measures for 'Force Majeure' as it means 'Superior Forces.' Some events cannot be contained; the contract dissolves the parties from contractual liabilities. As cited in the Case of Standard Retails Pvt. Ltd V/s .M/s G.S. Global Corporation & Ors.(2) where it was added that the Force Majeure Clause in the current caseapplies only to the seller and not the Petitioners who were buyers The Petitioners had sought a direction to restrain the bank from negotiating /encashing the Letter of Credits pertaining to imports. Therefore, lockdown being a cause cannot rescue importers from contractual obligations to pay. It is like a very cryptic order that this clause won't be allowed to be enforced as an exporter will benefit from this lockdown.



HOW DID FORCE MAJEURE EVOLVE AS A CONCEPT


Taylor V/s Caldwell1, with an opinion delivered by Justice Blackburn which established the doctrine of common law impossibility and also in the case of Md. Serajuddin V/s. The State of Orissa(3) said that records have to be taken according to the principles of ejusdem generis and it allows to take color from the preceding words


In the celebrated judgment of Satyabrata Ghose V/s. Naihathi Jute Mills(4) that the term Force Majeure to be construed in a very strict sense, the terms of the clause needs to be narrowly construed in its strict sense, or 'Anything' within the term is impossible; it was corrected that impossible doesn't mean physically impossible. It is only what makes the contract impossible to perform by the Principle of Radical Differentiation. Supreme Court said it just renders the contract impossible from the time it was signed, but no specific period has been specified till when would the contract remains held off.


Luxer V/s. Cooper (5), the words of Lord Wright as quoted no matter what equitable terms the Court may deem fit, but the term cannot be substituted to make it easy for parties.

Section 2(d) of the Natural Disaster Act and W.H.O.'s words have given its recognition as a Pandemic.Therefore, it is clear that the current COVID -19 SITUATION will come under Force Majeure's definition.



SUPERIORITY OF FORCE MAJEURE OVER DOCTRINE OF FRUSTRATION


The provision is crucial at this point of the wave of the virus is in businesses where the contracts related to project financial agreements, supply contracts, distribution agreements, agreements between real estate buyers, etc. are found and if the provision of Force Majeure doesn't relieve a party then the 'Doctrine of frustration' is brought into picture as per the Section 56 of the Indian Contract Act.


There lies a fine distinction between the two stated provisions Doctrine of Frustration comes into light only when the contract is executed and tends to or is knocked down, then Doctrine of Frustration is under obligation to come into rescue whereas Force Majeure is a contractual provision that is made before the execution of the contract immediately when an unforeseeable condition is inevitable and prevents a large sum as bad debts and preventing

the parties from executing their obligations.


In the absence of Force Majeure Clause, the contract is backed by Doctrine of Frustration as per Section 56 of the Indian Contract Act,1872. In a celebrated judgment of Energy Watchdog Vs. Central Electricity Regulatory Commission, the Supreme Court stated that any event which results in frustration whether implied or expressed contract is administered by Section 32 of the Indian Contract Act, 1872


Therefore, to conclude in the words of Hon'ble Supreme Court in the case of DhanrajmalGobindram Vs.Shamji Kalidas(6), it was held that Force Majeure is of a wider import with a strict and clear intention to safeguard the acting parties from the consequences on which one has no control over.



CONCLUDING REMARK


The onus of portraying whether Covid-19 in a strict sense affected a contract's performance lies wholly on the parties performing and doing so and looking for a mere excuse concerning any failure or discrepancy in compliance with a contractual obligation. A major role needs to be performed to examine the corresponding contract, and the current ongoing contract within into question falls within the ambit of Force Majeure Clause or not. The clause of Force Majeure will be utter situational since no party is debarred from any contractual obligation; therefore, Force Majeure will come into rescue. The beneficial aspect observed so far is that the clause provides immediate termination of the contract upon the force majeure phenomenon that is embodied in the legal maxim



"Impotentiaexcusatlegem," which means in general law, excuses a default if a party cannot perform a duty created by law without any default in him and where he has no such recognized remedy. Moreover, not only the facts should meticulously showcase that the situation of force majeure has occurred along with that special effect of the same on the occurrence of the contractual obligations which the parties seek to be duly excused from performing the same.


SUBMITTED BY-

Shreya Singh

Ramaiah College of Law,

1 F . Cas,7 Ben 301

2 [1863]EWHC QB J1

3 AIR 1969 Ori 152

4 AIR 1968 SC 522

5 [1941] A.C. 108

6 1961 AIR 1285

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