The World Health Organisation on 11^th March 2020 declared the Covid- 19 outbreak as a ‘pandemic’.Countries around the world are going through a global crisis. The staggering and unprecedented upheaval caused by the advent of Covid-19 has not only resulted in an extreme loss of lives but has also negatively impacted businesses across the globe. The impact of Covid-19 resulted in nationwide lockdowns and travel bans, soon this became a huge hindrance to the operations of businesses. Severe lockdown measures have forced many businesses to temporarily cease operations. The impact Covid-19 has had on these businesses also extends to the performance of contractual duties. Extended periods of lockdowns have hindered commercial activity at an unparalleled level. A world with Covid-19 is afflicted with failure or refusal to perform contractual obligations and stipulations. Consequently, it raises the question of whether the defense of ‘Force Majeure’ is available for non-performance of contractual obligations due to this reason.

What is Force Majeure?

As per Black’s Law Dictionary, the term Force Majeure is defined as, ‘any event or effect that can neither be anticipated nor controlled.’ Force Majeure a French word that translates to ‘superior force’ is something that can hinder the performance of contractual obligations. An extraordinary event or circumstance beyond human control could not have been anticipated which prevents parties of a contract from fulfilling their obligations enshrined in the contract.

Force Majeure in Indian Contracts Act, 1872.

The Act does not define the term Force Majeure or provide for circumstances and events which could be considered so. The essence of this is contained in Section 32 and Section 56 of the Act.

Section 32 - Enforcement of Contracts contingent on an event happening - Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.

 Section 56 - Agreement to do impossible act - An agreement to do an act impossible in itself is void.

The force majeure clause of a contract would provide temporary relief to the party unable to fulfill the obligation. To avail of this clause, an unexpected circumstance or event must occur which could not have been foreseen by a reasonable man. The occurrence of such an event should have hindered the performance of contractual obligations, while parties to the contract should have taken all measures necessary for said performance.

Thus, per these provisions, the parties may avail some reprieve from the performance of a contract due to unexpected events that are beyond the control of any person. Force majeure clauses are a very common inclusion in most contracts, to absolve parties of performance under unforeseen circumstances such as Covid-19.

The Ministry of Finance, Ministry of New & Renewable Energy, and other agents of the Government of India have declared Covid-19 as a 'natural calamity' within the definition of 'Force Majeure'.

In a recent judgment given by the Delhi High Court in the case, Halliburton Offshore Services Inc. v Vedanta Ltd. & Anr, the court stated that even though Covid-19 is a 'Force Majeure' event, it needs to be proved that such force majeure event is the direct causation of contractual non-performance. It was held that the facts and circumstances of each case need to be examined to justify Covid-19 as reasonable grounds for non-performance or violation of a contract. Every violation or non-performance cannot be excused solely because Covid-19 has been notified as a natural calamity that can invoke the force majeure clause. The Court would have to evaluate the conduct of the parties before the force majeure event, the time limitations that were imposed in the contract, the measures taken for performance, and only then assess as to whether a party of the contract was prevented from performing obligations or can reasonably justify its non-performance due to the pandemic.

This article does not intend to hurt the sentiments of any individual, community, sect, or religion, etcetera. This article is based purely on the author’s personal opinion and views in the exercise of the Fundamental Rights guaranteed under Article 19(1)(A) and other related laws being enforced in India for the time being.