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Dilemma of using force majeure clause in wake of Covid-19 pandemic

Authors: Priyal Agarwal and Payal Nayak, Students, Amity Law School, Delhi, India

Abstract

Covid-19 pandemic has brought forward new challenges beyond the control and foreseeability of the human race. Business and industrial operations are incurring financial losses and some are even edging closer to shutting down their economic activities. The growing perplexity in the commercial world has adversely impacted the forum of contract law in terms of non-fulfilment of contractual bargains. This paper addresses the conundrum faced by the parties as to what extent they can rely on a force majeure clause in order to excuse their obligations under the contract. Such clause has been progressively invoked by the parties on the occurrence of unavoidable events not driven by the act of human agency but which may happen by reason of the play of natural forces. It may be that in either of these cases accidents may be inevitable. This paper attempts to resolve the conflict by first, expounding on the concept of force majeure and it’s sub-set vis major; second, discussing the relevant statutory legal provision applicable to it; third, setting forth in detail the implication of such clause on the performance of a contract; fourth, elaborating on the doctrine of impossibility of performance due to unanticipated change of circumstances; fifth, filtering out the direct cause behind non-performance and evaluating the corresponding duty of the party to mitigate the effect; sixth, dissecting numerous orders, circulars, a notification issued by the government bodies and the recent decisions given by the judiciary. Conclusively, the paper proposes to find a middle ground in contrast to the total abandonment of obligations agreed under the covenant.


Keywords: Force majeure, Contract, Covid-19

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