Can defence under force majeure be taken if its not in the contract?
28-Apr-2023 (In Corporate Law)
Force majeure events include an Act of God or natural disasters, war or war-like situations, labour unrest or strikes, epidemics, etc. The intention of a force majeure clause is to save the performing party from consequences of something over which it has no control. Force Majeure is an exception to what would otherwise amount to a breach of contract. Whether a particular contractual obligation can be avoided would however depend upon the factual analysis. The courts would examine, whether in a given case, the impact of the COVID-19 epidemic prevented the party from performing its contractual obligation. Indian courts have generally recognised this concept and have enforced it where appropriate.
Force Majeure scenarios are very sensitive and depend highly upon the terms laid down in the contract. It is essential to look into the terms of the contract and the requirements of such a clause when a party is looking to invoke the force majeure clause of the contract or to seek protection under the doctrine of frustration. In order to defer or terminate its obligations parties may also attempt to take shelter under other clauses of the agreement such as price adjustment clause, material adverse change clause, and limitation or exclusion clause, in order to limit or exclude liability for not performing its contractual obligations. However, whether a party can take shelter under these clauses or not, would depend upon the terms as laid down under the contract.
However, in case the contract does not include a force majeure clause, the parties who are unable to carry out their contractual obligations can ask for relief under the doctrine of frustration under Section 56 of the Indian Contract Act, 1872. The doctrine of frustration refers to a situation where the performance of a contract is possible when the contract is made but becomes impossible or unlawful upon happening of an event which could not have been prevented.
In your case, since the force majeure clause is not covered, then you can use section 56 of the Act which says that if after the contract is executed, the contract become impossible to perform, then that contract becomes void. In simple language, you won’t need to perform the contract. However, if you have taken any advance from other party you will have to pay it back to the other party. In short parties shall put themselves and each other as they were before execution of contract.
You can send a legal notice to this affect.
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