Force Majeure during COVID-19: The Road Ahead!

By-Muskaan Singh

All over the world, 213 countries are battling global pandemic caused due to COVID-19. On 11th March 2020, the World Health Organization declared Coronavirus as a global pandemic. With the initiation of COVID-19 in India, there was not only a humanitarian crisis but also an economic crisis of an unapprehended scale. But particularly, restriction on the movement of people and goods has raised serious doubts in the mind of the people for the economy of the country. Uncertainty has arrived as to if the performance of the contract has led to parties breaching the contract.

Force Majeure means an “event or effect that can be neither anticipated nor controlled . . . [and] includes both acts of nature (e.g., floods and hurricanes) and acts of people (e.g., riots, strikes, and wars).”[1]

‘Vis Major’ (meaning ‘Act of God’ in Latin) is defined as an “overwhelming, unpreventable event caused exclusively by forces of nature, such as an earthquake, flood, or tornado.” [2]

The terms ‘Force Majeure’ and ‘Vis major’ or ‘act of God’ are similar yet different To sum it up ‘Force Majeure’ would be a wide ambit and ‘vis major’ can fall in that ambit; as Force majeure covers all the possible consequences natural or man-made whereas Vis major would only cover natural consequences. The Supreme Court in its landmark judgment Dhanrajamal Gobindram v. Shamji Kalidas & Co.[3]recognized the difference between the two.

Force Majeure: Contracts Act

Among unforeseen events such as wars, terrorism, riots, labour strikes, epidemics, pandemics, etc., if the certain event is capable enough to affect the performance of the contract, due to events like pandemic or epidemic; the parties in the said contract will be relieved from the performance of the contract.

There are situations and events wherein some events are not covered under the force majeure clause but; the clause contains a catchphrase that completes or includes the mentioned event. The catchphrases would have similar language to “including, but not limited to” etc; although such catchphrases are constructed ejusdem generis which is totally depending on the width of the language including all the clauses of the force majeure. For instance, if the event can be seen as a natural event, the language clearly states an event is a natural event; then the event will be covered under the ambit of Vis major.

Is an epidemic/pandemic an act of god?

Indian courts have not directly justified that an epidemic/pandemic is an act of God, but the arguments in Supreme Court case of The Divisional Controller KSRTC v. Mahadev Shetty[4]said that the expression “Act of God” includes the events which are natural and free from any human intervention. Similar rulings have also been passed by Kerala High court[5] and Madras High Court[6].

Although globally different countries have different interpretations towards it, countries like the United States of America and the United Kingdom include the event of pandemic/epidemic under the expression of ‘Act of God’.

In cases like Lakeman v. Pollard[7], the plaintiff was a laborer at a mill and he left his job because of contracting cholera and was not being able to complete the contract i.e. his work contract. The owner’s association were now seeking compensation because the work contract had been breached. The Supreme court held that there was no breach of contract as cholera would be under the ambit of an epidemic i.e. Act of god thus the duty to perform the contract was relieved.

In another interesting case of Sandry v. Brooklyn School District[8]appeals were made to the Supreme Court of North Dakota by the school bus driver for their compensation as during the influenza outbreak the transport services were shut.

The Supreme Court of Dakota held that the school was free from paying the bus drivers as the influenza outbreak would be considered under the Act of God. It is important to understand that the performance of the contract was relieved because it was absolutely impossible to perform the contract.

Provisions under Indian Law: the absence of Force majeure clause

There are two provisions under The India Contract Act 1972 which are relevant to Force Majeure and Act of God. Section 32 of The Indian Contract Act deals with contingent contracts and inter alia it is based on the happening of a future event and when it becomes impossible the Contract also becomes void.

Similarly, section 56 of the act deals with the frustration and provides that a contract becomes void if it is impossible to perform the contract; by the reason that the promisor could not prevent.

In a number of cases starting from Satyabrata Ghosh v. MugneeramBangur[9] to Energy Watchdog v. CERC[10], events such as force majeure were relatable as it was held by the Supreme Court that when a clause is related to force majeure in a contract it is guarded by section 32 whereas section 56 applies when the event dehors.

The mere reason that COVID-19 is pandemic would not suffice for force majeure clause to apply to the contract. The force majeure event should directly affect the parties in such a way that the parties or even a single party is not able to perform the contract after trying all alternate solutions; only then the said contract will be relieved and the parties will be relieved of its duty.

In situations like the one which is currently going on where the world is at stake; the lives of people are at stake; the global economy is at stake, still, the people are taking advantage of such a situation and relieving themselves from their duties and contracts. The global pandemic has bought the economy at a standstill because of the people using this event under the clause of force majeure even though the majority of them will not be entertained under this ambit.

So, in order to curb such situations, people should not only send letters for applying the force majeure clause but also now provide reasons as to how the situation is affecting the parties or anyone party of the contract. Because of which the performance of the contract is impossible.

Providing the same would remove all the ambiguity and thus, a clear image would be drawn as to how the economy is being varied because of the non-fulfillment of the contracts in such pandemics.

[1]Black’s Law Dictionary (11th Edition, 2019).

[2]Black’s Law Dictionary (11th Edition, 2019).

[3]Dhanrajamal Gobindram v. Shamji Kalidas & Co., AIR 1961 SC 1285.

[4] The Divisional Controller KSRTC v. Mahadev Shetty, 2003 7 SCC 197.

[5] Kerala Transport Co. v. Kunnath Textile, 1983 KLT 480.

[6] P.K. Kalasami Nadar v. Ponnuswami Mudaliar, AIR 1962 Mad 44.

[7] Lakeman v. Pollard, 43 Me 463 (1857).

[8]Sandry v. Brooklyn School District, 182 NW 689.

[9]Satyabrata Ghosh v. Mugneeram Bangur, [1954] SCR 310.

[10]Energy Watchdog v. CERC, (2017) 14 SCC 80.


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