The whole world has suffered a major crisis and is continuously fighting the
Covid-19 crisis. People across the globe are facing huge repercussions due to
it. There was particularly a huge disruption in economic activities as the
imposition of lockdown prevented the smooth functioning of businesses, leading
to a great impact on the existing contracts. Several contractual parties started
to reconsider the need for modifying and terminating their contracts.
In this, a
new concept emerged i.e. the use of Force Majeure Clause. Parties trying to
escape losses and in need of a solution started to take the shed of the Force
Majeure Clause. Force Majeure Clause in Latin means superior force. It's an
event that is unanticipated and outside the control of people. Therefore,
parties who entered the contract before the pandemic and couldn’t comply with
their obligation started to use the Force Majeure Clause.
Now it is to be
decided that whether we can consider pandemic under the Force Majeure Clause?
and would it be applicable as the Indian Contract Act doesn’t deal with it
specifically. Also, whether all the commercial contracts where non-performing
parties are unable to perform their contractual obligation can take its remedy.
Through the cases, it's observed that it is not the scenario and its
applicability depend on the terms of case and the clause of the contract. Sec
56 of the Indian Contract Act can be used by the parties in case their contract
does not contain Force Majeure Clause. The interpretation/application of use of
force majeure clause in other countries is also discussed in brief.
Globally all the countries are facing a major crisis due to the coronavirus
pandemic. The cases are exponentially rising and to control it several countries
had announced nationwide lockdown. Due to this all the sectors are disturbed; be
it political or economical or social. All this has caused huge disruption in
economic activities, as the lockdown prevented the smooth functioning of
businesses, leading to a great impact on the existing contracts.
continuation of the contracts and fulfilling the contractual obligations had
become difficult for the contractual parties. In all this, the use of Force Majeure Clause was highlighted and came into limelight. And in this paper, I
would be covering whether the force majeure clause would be applicable in the
current scenario of Covid-19 outbreak.
Where, Part 1 deals with the brief
introduction of force majeure and force majeure clause in a contract. Part 2
deals with Indian jurisprudence concerning the force Majeure clause and its
applicability with the help of a few cases. Part 3 deals with the remedy
available in the absence of a force majeure clause. Part 4 deals with how in
other countries the force majeure clause is applied/ interpreted.
What is Force Majeure?
Force Majeure in Latin means ‘superior force
’. It has been defined in the Black
Law’s Dictionary as ‘an event or effect that can be neither anticipated nor
’ The term includes events which are act of nature example volcano,
tsunami, earthquake, volcano etc and acts of people example war, riots,
’ (Act of God) is defined as an “overwhelming, unpreventable event
caused exclusively by forces of nature, such as an earthquake, flood, or
A lot of times force majeure is mistaken for Vis Major. Force majeure includes
both types of unforeseen events i.e. natural and artificial events whereas, Vis
Major comprises only natural unforeseen events. In fact, Vis Major is a subset
of Force Majeure. Supreme Court of India, in the case of Dhanrajamal Gobindram
v/s. Shamji Kalidas & Co., has recognized this distinction.
Notwithstanding the difference, the main aim of these two is to excuse the
parties to contract from performing their contractual obligations without any
threat of breach of contract. The parties won’t be held liable for
non-performance in case of an unforeseeable situation on which they do not have
Force Majeure Clause in Contract
In simple terms, Force Majeure clause refers to events or circumstances that are
unforeseeable or not reasonably foreseeable at the time of execution of the
A and B enter into a contract were A has to deliver goods to B but due
to the sudden occurrence of flood he is unable to deliver goods.
In this example the flood is the unforeseeable event which both the parties
could not reasonably foresee while entering into the contract. And since it was
an unforeseeable event the performing party is excused from the performance. But
it is pertinent that the force majeure clause should be inserted in the contract
to take its defence.
The force majeure clause is included in contracts very often. The clause is
framed as mutually agreed by the parties and includes events such as the wars,
act of God, terrorism, riots, labour strikes, embargos, acts of government,
epidemics, pandemics, plagues, quarantines, and boycotts. If any event mentioned
in the clause happens and prevents the performance of the contract, then in this
scenario the affected parties may be relieved from the performance as explained
in the above example. This clause in a way provides a temporary break to the
parties from their contractual obligations if such an event occurs.
If such an event is not specifically mentioned in the clause then, many force
majeure clauses include words or phrases which are in addition to the
specifically mentioned events. The phrase could have a language which is
inclusive like “including, but not limited to
” or “any cause or event outside
the reasonable control of the parties
The pre-requisite things for invoking the Force Majeure clause are :
- The Event should be an unforeseeable event
- Due to the occurrence of such an event, the performance of the
contractual obligations must become impossible
- The event that occurred must be beyond human control
- All measures should have been taken to mitigate the damages
- The affected party has the burden of proof to show that the force majeure event has affected the performance of such party as per the contract.
When the above-mentioned conditions are fulfilled, one can successfully apply
the force majeure clause in their contract and be excused from performing their
contractual obligations in case such force majeure events take place.
Indian law on the concept of Force Majeure
In India, the concept of Force Majeure has neither been defined nor specifically
dealt with under any statutes. But legislators have dealt with it to some extent
under section 32 and section 56 of the Indian Contracts Act, 1872.
Section 32 of the act deals with contingent contracts and reads as follows:
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."
A makes a contract with B to buy B’s horse if B marries C. This contract cannot
be enforced by law unless and until B marries C.
So, if an unprecedent event occurs like pandemic or flood and its being
mentioned in the clause then the contract becomes contingent as it depends on
happening and non-happening, i.e. if it occurs the parties must have agreed
beforehand what to do in such situation, whether to suspend or cancel the
Sec 56. of the Act deals with frustration of a contract and provides that a
contract becomes void inter alia if it becomes impossible, by reason of an event
which a promisor could not prevent, after the contract is made.
A contract with B to deliver goods to B in other country. Later if A’s
government declares war against the country in which the B is situated the
contract becomes void when war is declared.
From above it could be seen that force majeure events can be dealt under these
sections. As there is possibility that due to the uncertain event the contract
can becomes void or impossible to perform.
Can Covid-19 be considered under Force Majeure?
So, now the question arises that whether the parties who entered into a contract
before the Covid-19 outbreak and couldn’t complete their contractual obligations
due to the lockdown could take the help of Force Majeure clause for
On 19-02-2020 the Government of India, through its memo no. F. 18/4/2020 PPD
issued by the Ministry of Finance declared that the disruption of supply chains
caused by the Covid-19 outbreak should be considered a natural disaster and be
covered under the force majeure Clause, and invoke it wherever necessary,
following due procedure of law.  The pertinent point to be noted here is that
all the commercial contracts entered and disrupted would not fall under it, as
it is specifically limiting itself to the supply chains.
Also, not all the disrupted contract parties could take the defence of Force
Majeure clause. The foremost condition to it is that the clause should be
included in the contract before entering. Secondly, the non-performing parties
who want to rely on Force Majeure clause should check that whether pandemic is
mentioned in it. Thirdly, it also depends on how courts interpret the clause and
hence its applicability varies from case to case.
Another important aspect which has to be kept in mind before invoking the Force
Majeure clause is that the performance must be objectively impossible, merely
difficult, or uneconomical performance is not sufficient. The Supreme Court in
Energy Watchdog v. Central Electricity Regulatory Commission held that only
events which are explicitly mentioned in the contract can excuse a party from
performing its obligations. Meaning that impossible here refers to physical
or literal impossibility.
In the case of Standard Retail Pvt. Ltd vs. M/s. G.S. Global Corp And Ors
respondents had to supply certain steel products to the petitioners, and the
same was complied by them. But to surprise, the case was filed by the
petitioner instead of respondent no 1. They said that due to the covid-19
outbreak and lockdown they won’t be able to make the payment and wanted to rely
on the force majeure clause. Their contract was based on general terms and
included a force majeure clause.
The Bombay High Court, while dismissing it,
held that in this contract the force majeure clause was only applicable to the
respondent no 1 and the petitioners could not take defence of it. Respondent no.
1 did comply with its obligations and delivered the goods but the fact that the
petitioners cannot pay back, and it would suffer damages is not the factor that
can be held against Respondent no 1.
The court took this opportunity and cleared the wrong concept that was
prevailing concerning force majeure event
and the application of Doctrine of
of Contract on account of COVID-19. The court said the lockdown
could not come to the rescue of the petitioners so as to resile from their
contractual obligations. In short, just a little hardship in complying with the
contractual obligation because of the Covid-19 pandemic is not a valid ground
which can be used against a seller.
In Halliburton Offshore Services Inc. vs. Vedanta Limited and Anr
petitioner filed an interim application for protection against the
respondent.  It was filed against the respondent from invoking bank
guarantee as the petitioner could not perform its contractual obligations due to
pandemic and lockdown in the country.
The court held that the imposition of
a country wide lockdown in the interest of justice would justify as special
equities in the form of preventing irretrievable injustice to the Petitioner and
passed an ad-interim injunction order restraining invocation of bank guarantees
till the expiry of one week from 3rd May 2020, till which date the lockdown
stood extended then.
Remedies available in absence of Force Majeure clause
In the case of absence of provision of force majeure clause in a contract, the
doctrine of frustration under section 56 of the Indian Contracts Act, could be
invoked. The provision states that in case a contract to do an act becomes
impossible to perform, because of some unavoidable circumstances, which the
promisor cannot prevent, it will be unlawful and subsequently, the whole
contract becomes void.
Through this, the parties can possibly prove the ‘absolute’ impossibility of
contractual performance through an unforeseen event that occurs during the
performance of a contract. In the sense that the fundamental basis of the
contract should go away, and the contract need not be further performed, as
insisting upon such performance would be unjust.
Epidemic/pandemic covered under the Force Majeure clause in other countries
The Courts of the United States of America and the United Kingdom have
specifically stated that the pandemic/ epidemic is included in the expression
‘Act of God’.
Example of the US case:
In Lakeman vs. Pollard’s case
a labourer left his job
early and failed to complete his work contract during the cholera epidemic among
the fear of contracting the disease.  The mill owners in an action of
seeking compensation for work done by the labour argued that the labourers had
breached the contract. The Supreme Court of Maine held that contract was not
breached, as the cholera outbreak was an ‘Act of God’ and due to it his duty to
perform under the contract was discharged.
Example of UK law:
In Aviation Holdings Ltd. v. Aero Toy Store LLC
non-performing party was unable to deliver an aircraft due to the dearth of
pilots amid a pandemic. Here, it was held that the dearth of pilots due to a
pandemic fell within the catch-all residuary wording of a force majeure
From above it could be seen that the parties can avail the force majeure clause
in their contracts depending on the nature and terms of the contract. Further,
the parties have to make sure that they do not have any other alternative mode
of performing their contractual obligations and if they do, then they have to
make use of that and in such case, the Force Majeure clause will not be
applicable. Courts in India have also upheld the invocation of the clause.
But the interpretation of the courts is very stringent, and the applicability of
their decision depends on case to case basis. Hence, it could be concluded that
the parties can invoke the force majeure clause in India subject to that it is
included in their contract. In addition to this, the doctrine of frustration can
come as a saviour in case the force majeure clause is not included in the
Written By: Riddhi Shah
- Blacks Law Dictionary (11th Edition, 2019).
- Blacks Law Dictionary (11th Edition, 2019).
- Dhanrajamal Gobindram v/s. Shamji Kalidas & Co., AIR 1961 SC 1285
- Adarsh Saxena, Aditya Sikka & Drishti Das, Force Majeure in the times of
Covid -19, Cyril Amarchand Mangaldas Blog, April 30, 2020 Available at:
- Tarun Dua and Geetanjali Sethi, Force Majeure in times of COVID-19:
Challenges And The Road Ahead, Mondaq, May 11, 2020.
- Soujanya Priya, Significance of Force Majeure in light of COVID-19,
Available at: http://www.legalserviceindia.com/legal/article-3002-significance-of-force-majeure-in-light-of-covid-19.html
- Energy Watchdog v. CERC, (2017) 14 SCC 80
- Standard Retail Pvt. Ltd vs. M/s. G.S. Global Corp And Ors, Bombay High
Court decided on 8 April 2020. Case No 404 of 2020
- Halliburton Offshore Services Inc. vs. Vedanta Limited and Anr, (1988) 1
- Aniketh Nair and Dev Motta, Shelter Under ‘Force Majeure’ Clause in
COVID-19 Times, Available at:
- Adarsh Saxena, Aditya Sikka and Drishti Das, Force Majeure in the times
of Covid -19, Cyril Amarchand Mangaldas Blog, April 30, 2020 Available at:
- Lakeman v. Pollard, 43 Me. 463 (1857)
- Aviation Holdings Ltd. v. Aero Toy Store LLC,  2 Lloyd’s Rep 668.
, Student Of Pravin Gandhi College Of Law, Mumbai University