Force Majeure and its Relevance during Covid-19 Lockdown

हिंदी में पढ़ें
May 07, 2020
By Advocate Chikirsha Mohanty

The impact of COVID-19 is severe on domestic as well as international businesses across countries and sectors. The lockdown implemented by the government has restricted movement and has shut down operations of all the non-essential services resulting in businesses suffering due to supply chain disruptions. As a consequence, the performance of contracts is also being delayed and in some cases being cancelled. It is also possible that parties to these contracts may use this opportunity to delay or avoid their obligations on the grounds that the current lockdown situation has forced them to not perform the same. In light of this, it has become crucial to understand whether the Coronavirus outbreak can be considered as force majeure/Act of God or not, acting as a defence for non-performance of contractual obligations.

Connect with an expert lawyer for your legal issue

What is Force Majeure?

The law relating to Force Majeure (a French phrase that means a ‘superior force’) is embodied under Sections 32 and 56 of the Indian Contract Act, 1872. It is a contractual provision agreed upon between the parties. The occurrence of a force majeure event protects a party from liability for its failure to perform a contractual obligation.

What does Force Majeure include?

Typically, 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.

Can one take defence under Force Majeure for not performing its contractual obligations during lockdown?

Due to the supply chain disruptions caused by the lockdown, it is likely that the performances under many contracts will be delayed, interrupted or even cancelled. Parties to a contract may seek to delay or avoid their responsibilities under the contract, either because the lockdown has legitimately prevented them from performing their contractual obligations, or because they are seeking to use it as an excuse to free themselves from an unfavorable deal. They may also cite COVID-19 as a basis for renegotiation of the cost or other key contractual provisions. This is why it is important to determine whether COVID-19 will be considered as a ‘Force Majeure’ event.

In India, the Department of Expenditure, Procurement Policy Division, Ministry of Finance issued an Office Memorandum on February 19, 2020, in relation to the government’s ‘Manual for Procurement of Goods, 2017’, which serves as a guideline for procurement by the government. In the Memorandum, the ministry has stated that the COVID-19 outbreak could be covered by a force majeure clause on the basis that it is a natural calamity. Therefore, parties to a contract can take defence under force majeure for not performing their contractual obligations during lockdown.

Consult: Top Corporate Lawyers in India

Whether contractual obligations can be excused during a health crisis such as Coronavirus outbreak?

Some of the contracts contain provisions stating that it can be put on hold until the force majeure event is resolved. Moreover, some contracts also provide for limitations in time after which either party may cancel the agreement with written notice to the other. However, if a contract does not contain provisions especially stating any of these situations, the contract will remain in effect until the force majeure event is resolved.


What if a contract does not have a Force Majeure clause?

Sometimes, 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. This phenomenon is referred to as the ‘Doctrine of Frustration’. Therefore, 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.

Can individual contract terms affect the defence under Force Majeure?

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.

Connect with an expert lawyer for your legal issue

How can a lawyer help?

Looking at the complexity of the issue, it is highly impossible for a layman to understand the technicalities involved in the issue. Interpretation of terms of a contract in accordance with the law is in itself a very technical task and beyond the scope of expertise of a layman. This is why it is imperative in times like these to have a corporate lawyer by your side who can help you understand the technicalities involved and can formulate the right strategies to ensure the desired result in contract-related litigation.


These guides are not legal advice, nor a substitute for a lawyer
These articles are provided freely as general guides. While we do our best to make sure these guides are helpful, we do not give any guarantee that they are accurate or appropriate to your situation, or take any responsibility for any loss their use might cause you. Do not rely on information provided here without seeking experienced legal advice first. If in doubt, please always consult a lawyer.

Googling your legal issue online?

The internet is not a lawyer and neither are you.
Talk to a real lawyer about your legal issue.

Popular Corporate Lawyers

Advocate Rajesh Rai
Sector-19, Dwarka , Delhi
20 years Experience
Advocate Sunil Kumar Bakshi
Sector-16 , Faridabad
33 years Experience
Advocate Bala Janaki
330 Thambuchetty Street , Chennai
35 years Experience
Advocate Prerna Oberoi
Sector 41 , Noida
8 years Experience

Related Articles

Connect with top Corporate lawyers for your specific issue

Legal Questions Answered by Top Lawyers

Corporate Law Articles

Company Compliance Checklist during Coronavirus for Financial Year 2019-20

Business Lookouts During COVID-19 (PART 1)

​All you need to know about the Personal Data Protection Bill, 2018

Decoding the concept of a Private Limited Company

User Reviews

4.9 - 19 reviews

thanks for the information

Kajal on Oct 19, 2020

very good article. Can you tell me more about the law?

Santhosh on Oct 17, 2020

Gave a clear understanding about my legal issue.

Manjula on Sep 26, 2020

informative with the law.

Sakshi on Sep 21, 2020

Very helpful for my legal case.

Prakash on Oct 12, 2020

thanks for the advice

Sneha on Oct 17, 2020

nicely explained. Thanks fro the information

Aditi on Oct 02, 2020

very informative.

Smita on Oct 21, 2020

nice article

Nagaraj on Oct 02, 2020

it’s a very good article

Pranav on Oct 07, 2020

good article and easy to understand

Sonia on Oct 12, 2020

thanks for the info. How can we contact a lawyer?

Satya on Sep 09, 2020

good work. Keep it up

Sneha on Oct 17, 2020

very good article. Good writing

Sanju on Sep 11, 2020

helpful in understanding the law

Anish on Oct 13, 2020

I have legal query. Who can I call?

Shilpa on Oct 22, 2020

good article. Can you give some more detail on the issue.

Anil on Sep 15, 2020

learned all the basics about the legal issue. Good article. Keep it up.

Parveen on Oct 14, 2020

Understood the subject with clarity.

Vineet on Oct 19, 2020