This article is written by Shanu Jain, a student of BA LLB from Teerthanker Mahaveer University, Moradabad and who is pursuing Certificate Course in Introduction to Legal Drafting from LawSikho.
Table of Contents
Introduction
Most of the times we have seen that there are occurrences of some events or an acts which are unforeseeable or an acts of nature which are independent of human intervention which cannot be seen by any amount of human ability and skills. If there is a case of prediction of the unforeseen act but it cannot be in any means, care, and skill be prevented then under all these circumstances the role of “Force Majeure” emerges. For instance, Anil and Sunil entered into the contract where Anil promises to deliver 100 tons of coconut oil to Sunil and at the time of making the contract they included the clause “Force Majeure” and after completing all formalities of Contract the same is executed but Anil did not deliver the oil to Sunil due to Covid-19 lockdown. Under this situation Anil is under no obligation to perform the contract.
The term “Force Majeure” is a French word which literally means “Greater Force” we can also called it as “An act of god” it comes under the boilerplate clauses of contracts which specify the situations which are outside the control of the parties and protects the parties from being liable for its failure to perform their obligations under the contract.
It mainly covers earthquake, volcanoes, drought, floods and other natural calamities and rarely covers any endemic or pandemic but “Finance Ministry in February” around 20-02-20 clarified that disruption in supply chain due to spread of coronavirus qualifies as a force majeure event, and companies and businesses can invoke force majeure clause.
Laws related to Force Majeure in India
The term “Force Majeure” is not defined anywhere but it derives its reference from the “Indian Contract Act, 1872” which determines or talks about the events and circumstances in which promises in a contract shall be legally binding but it is silent on the term “Force Majeure”.
Though the Act (hereinafter the “Indian Contract Act, 1872”) regulates the term ‘Force Majeure’ and allows an agreement for non-performing an “Impossible Act”.
Relevant provisions to regulate the term “Force Majeure” under the Act are as follows:
Section 32 Contingent contracts to do or not to do anything if an uncertain future event cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.
For Example- Sunil contracts to pay Bunty a sum of money when Bunty marries Chandani. Chandani dies without being married to Bunty. The contract becomes void and impossible to perform under these circumstances Sunil is under no obligations to pay Bunty.
Section 56 simply says that to do any act after the contract is made, becomes impossible due to some unforeseen event which cannot be prevented by any means becomes void.
The term ‘Force Majeure’ is like a protection to the parties of the contract in the event of non performance of the contract due to some unpredicted situations. It is kind of an exception against breach of contract.
When an act become impossible
Contract law generally talks about the situations in which one party’s contractual obligation to perform become impossible by such an event which cannot be avoided by the due diligence of the parties like flood, volcano, fire etc. it is recognized that it would be unjust for the parties to hold their contractual obligations under these extraordinary circumstances.
For Example- A company had entered into a contract with an event organizer to provide sound and lighting for a concert.
However, due to the lockdown imposed in India, the concert can no longer take place. In this case, the contract between the company and event organizer will be frustrated since due to the lockdown imposed by the government, it is now impossible for the concert to take place and therefore for either party to perform its obligations and therefore the contract will, in light of Section 56 of the ‘Indian Contract Act, 1872′.
There are some circumstances under which an act become impossible theses are as follows:
- At the time of making the contract- if any contract is void-ab-initio no matter parties are known about this or not then under this situation the performance of such contract becomes impossible.
- Supervening Impossibility- if any contract is made and after the contract is made any act which is not possible to do or which is not in control of the parties than under this situation the performance of the contract becomes impossible.
It is held by the Supreme court in Satyabrata Ghose v. Mugneeram Bangur and Co. that “Impossibility” it does not only refer to physical impossibility but if it is impracticable and does not achieve the object, parties have in their mind.
Difference between Force majeure and Impossibility
|
S.NO. |
Force Majeure |
Impossibility |
|
1. |
Prior to the execution of the contract parties identify the events, which would attract the applicability of the Force majeure clause. |
Impossibility of a contract to be invoked or applied when the subject matter of the contract be destroyed on the happening of some unforeseen events. |
|
2. |
It is a Contractual provision contemplating an event, which can result in deferment of performance of contract. |
It is a dehors of contractual provisions and is the end result of events arising after the contract was executed. |
|
3. |
Force majeure is not intended to excuse negligence of parties. |
Impossibility is not applicable in the situations where there is self-induced impossibility. |
|
4.
|
The term ‘Force majeure’ is not defined anywhere in the Contract act but it is regulated by the Contract Act. |
The term ‘Impossibility’ is dealt with section 56 of the Contract Act. |
|
5. |
It is a kind of boilerplate clause of the contract which must be initiated prior to the execution of the contract. |
It is not defined as a clause of the contract. |
Conclusion
The term ‘Force Majeure’ and ‘Impossibility’ both are regarded as the protection of the parties against the contractual obligations if anything happens which is not under control of the parties and due to which they are unable to perform the contracts and being held liable for that than is such circumstances one can invoke both the terms.
In case when there is no clause of Force majeure is mentioned during the execution of the contract the parties of the contract then the parties can invoke Section 56 of the Contract Act, 1872 for not being held liable for the extraordinary circumstances.
When the contract itself contains the clause of Force majeure and the parties still try to invoke Section 56 then the Court will not consider Section 56.
Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.
LawSikho has created a telegram group for exchanging legal knowledge, referrals and various opportunities. You can click on this link and join:
