Force Majeure means the occurrence of any unforeseeable circumstance which
prevents the party from performing its obligations under a contract.
- Unexpected/unforeseen intervening event.
- Performance of obligations impossible/impracticable.
- Parties took all measures to perform the obligations/at least to
mitigate the damage.
Events that may act as Force Majeure are:
- Natural Disaster.
- Epidemic etc.
Doctrine of Frustration:
Frustration refers to when the contract is rendered impossible of its
performance by external causes beyond the contemplation of parties.
It basically includes:
- Impossibility of the performance of the contract.
- Impossibility of the fulfilment of the ulterior purpose for which the
contract was first entered.
Difference between Force Majeure and Doctrine of Frustration
- Force Majeure is not defined properly but to some extent it is hinted as
contingent contracts in Section 32 of Indian Contract Act,1872.
Whereas Doctrine of Frustration is defined under Section 56 of Indian Contract
- Force Majeure is a Contractual Remedy.
Whereas Doctrine of Frustration is a Statutory Remedy.
- Force Majeure include acts of governments, war, act of god, pandemic or
any other events as may incorporated by the parties having contract between them
prior to its executions.
Whereas Doctrine of Frustration simply happens after the execution of contract,
the act has happened which is an outside event and such act makes the
performance of the contract impossible.
Now, Is COVID-19 a Force Majeure event?
Following points must be taken into consideration to analyse the possibility of
Force Majeure event:
- Whether contract contains Force Majeure clause or not?
- If the contract contains Force Majeure clause then section 32 of ICA,1872 is
applied and if not then Doctrine of frustration i.e. section 56 of ICA,1872 is
- Mere difficulty or inconvenience of a party is not force majeure.
All the above conditions are true and thus there is no doubt that COVID-19 is a
Force Majeure event.
As per the recent judgements the court has cleared the view that that a Force
Majeure clause is to be interpreted narrowly and not broadly. If an issue of
application is made based on Force Majeure event, then the question arises that
whether COVID-19 would justify the non-performance or breach of the contract.
Every breach or non-performance cannot be justified or excused merely on the
invocation of COVID-19 as Force Majeure condition and it must be examined on the
facts and circumstances of each case. Parties ought to be compelled to adhere to
contractual terms and conditions and excusing non-performance would be only in
an exceptional situation.
At the onset, one of the important premises of contract law is the principle of
pacta sunt servanda
, which means ‘agreements must be kept'. Accounting for
exceptional circumstances that may condense a party unable to honor its part of
its obligations, a force majeure clause forms a boilerplate clause in agreements
across the domain today and aims at pardoning one or both parties from liability
to perform contract obligations when the inability to perform is due to some
factor/event/circumstance beyond the parties control.