Invoking Force Majeure Clause in the Times of Covid-19
Volume III, Issue III, 2020
COVID-19 also known as a novel corona virus is a spillover event, with its epicenter in China. Covid-19 eventually became a major global health concern due to its pathogenicity which has given an unprecedented distress to the economies around the globe. The Covid-19 pandemic while causing major loss of life has adversely affected business, trade and commerce, i.e., the commercial world. When two parties enter into an agreement to trade with each other, a contract is formed between them. However on account of this pandemic, party would not be able to perform their contractual obligations and the contract become impossible to perform and in such circumstances many contracts will be deferred, suspended or even terminated. Under such scenarios, the force majeure clause would be a determining factor to protect parties from such breach. “Force majeure refers to a clause that’s inserted in contracts to terminate burden for inevitable catastrophes that interrupt the expected course of events and prevent parties from fulfilling obligations.” A force majeure clause may incorporate an exhaustive list of events such as Act of God or other acts as may included by the parties in the contract prior to its execution. It is pertinent to note that the force majeure clause did include ‘epidemics’ in number of contracts between the parties and after analysis of such circumstances, the Ministry of Finance, Government of India along with other ministry by virtue of its Office Memorandum has declared that the spread of Covid-19 falls within the definition of ‘Act of God’ as a ‘natural calamity’ and to spread force majeure Section 32 and 56 of the Indian Contract Act, 1872 has to be read.