The Impact of COVID-19 on Commercial Contracts Including Force Majeure Clauses

Must Read

An Insight into Custodial Death in India

“The occurrence of Custodial deaths in the world’s greatest democracy has raised the eyebrows of every citizen and shaken...

Implications in Travel Insurance in Light of the COVID-19 Crisis

As the world, today is crippled by this once in a century pandemic and as of date more than...

Second-Round Effects of Rent Control Laws: The Argentine Case

Introduction In colonial India, a city had an issue with its cobra population, which was a problem clearly in need...

Why Are the Big Techs of Silicon Valley Accused of Anti-Competitive Behaviours?

The big tech giants of the Silicon Valley are facing major challenges with relation to their monopolistic powers after...

KSK announces Sanjay Kumar as a Partner for Pharma & Life Sciences Practice

New Partner for KSK's Pharma & Life Sciences Practice King Stubb & Kasiva recently announced that Mr Sanjay Kumar has...

The Debate Between IPR and Competition Law Explained

There are various market processes or structures that govern market scenario. For simplicity, this paper focuses on two mechanisms:...

Follow us

The novel coronavirus pandemic has shaken up the world. It has also had a tremendous impact on the global economy. The virus has affected close to every continent. Governments of the world have had no option but to impose lockdowns and close businesses. This article responds to the question if COVID-19 is a force majeure event. It also tries to show if the pandemic is an excuse for a party to not perform a contract.

Force Majeure and its Types

So, what is a force majeure event? It is a situation that occurs on its own and is beyond the reasonable control of the contracting parties. The situation does not allow the party to perform its obligation under a contract. Force majeure events may include natural calamities. They may further include government action, riots, amendments to the existing laws, etc. Most force majeure clauses are dependent on what the parties have agreed upon.

Force majeure clauses are usually of two kinds:

  1. Specific Force Majeure Clauses: Most force majeure clauses are of a specific type. These types of clauses contain specific and detailed circumstances. There are clear thresholds in the clause that needs to occur for the application of the clause. Hence, only these events may stop the party from performing its obligations.
  2. Broad Force Majeure Clauses: In these types of clauses, the conditions for a force majeure event are not laid out. Instead, the two parties decide upon a broad set of circumstances. However, the said circumstances must make it completely impossible to perform the obligation.

In India, the Indian Contract Act covers the application of the force majeure doctrine. Section 56 of the Act states that when parties sign a contract to do an impossible act, such a contract is void. Also, if the act becomes impossible to perform, the parties may be freed from their obligation. This also applies when the contract becomes unlawful. This Section usually applies when there is no force majeure clause in the contract.

COVID-19 and Force Majeure

As is clear, the present pandemic has caused great pains to the business community. Due to the lockdown, many people may have to delay their contractual performance. They may even have to cancel performing their obligations. Thus, it is pertinent to answer one question. Can the pandemic and lockdown be regarded as a force majeure event?

This is contingent on the language and wordings of the clause in the contract. If the clause expressly provides for a situation such as a government lockdown. However, if the provision does not cover a pandemic or lockdown, then the party will have to perform the contract. Alternatively, they will have to face the consequences of a breach of contract.

Judicial Precedents

There have been various precedents passed by the Indian Courts regarding force majeure clauses. There have also been precedents about the doctrine of frustration. For instance, the Energy Watchdog v. Central Electricity Regulatory Commission is an important judgment about force majeure. It stated that if there was a clause in the contract that specifically laid down the circumstances leading to frustration of contract, then such a clause must be given extreme importance.

Furthermore, if a contract contains a force majeure clause, it can be invoked for any event. This is provided the wordings of the clause allow it. Words like ‘Government lockdown’ or ‘pandemic’ in the clause can be used to rescind the contract. Further, the government has also made two announcements on force majeure. The first is the announcement by the Finance Ministry. If a company is unable to fulfill its obligations with a Chinese party, then it can use force majeure.

The second is the permission given by the Ministry of New and Renewable Energy. It has allowed companies to use the force majeure clause if they cannot fulfill their obligations.


The coronavirus pandemic is one of the worst problems faced by Indian businesses. Mainly, what should businesses do to save themselves? Since June 2020, the Government has already taken steps to reopen businesses. But there are a lot of businesses that have been unable to recover due to the lockdown. This has caused a lot of people to invoke the force majeure clause. Having said that, it is important to remember that all contracts are different. Each contract has its own version of the clause. Force majeure is only going to be applicable to contracts that fit the current situation. Therefore, it is all dependent on the language of the clause.

Since there has been no recent judgment by the Courts regarding this issue, there is a lot of confusion. There are no clear guidelines laid down yet. It may be in the best interest of the companies to reach a middle point, and not go to Court. Going to Court for breach of contract is a long and expensive process. Hence, companies may avoid it altogether. In such a situation, it is best to find a solution that works for both parties. But, in reality, no one knows the steps companies will actually take. is now on Telegram. Follow us for regular legal updates and judgments from the court. Follow us on Google News, InstagramLinkedInFacebook & Twitter. You can also subscribe to our Weekly Email Updates. You can also contribute stories like this and help us spread awareness for a better society. Submit Your Post Now.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Latest News

NGT Red-Flags Kaleshwaram Project: Green Clearance Violated the Law, Halt Work

Excerpt The National Green Tribunal (NGT), Principal Bench, dated 20th October 2020, directed the Telangana government to stop all work, except the drinking water component...

There Can Be No Leniency Shown To Appellant Who Pleaded To Reduce Sentence: Delhi High Court

Facts On 25.2.2016 the victim’s sister who was 13 years old was present with her sister who was 2 years old (victim) at their home....

Violation of Executive Instructions Cannot Be Sole Ground to Invalidate Transfer Orders: Tripura High Court

In Dr Bithika Choudhury vs the State of Tripura & Ors., a Division Bench consisting of Hon’ble Justice S. Talapatra and Hon’ble Justice S.G. Chattopadhyay...

Case Regarding Anticipatory Bail, Applicant May Be Released Imposing Suitable Conditions: Gujarat High Court

A Single-Judge Bench of Gujarat High Court consisting of Honourable Dr Justice A.P. Thakur had been hearing submissions of the Applicant to release him...

Proof of Infliction of Fatal Injury Not Mandatory for Conviction Under Section 307, IPC: Tripura High Court

In the case of Mamin Miah vs the State of Tripura, a Division Bench consisting of Hon’ble Justice S. Talapatra and Hon’ble Justice S....

Bombay High Court Pursues Case Alleging Media Trial, Says NBSA Guidelines Must Be Toothed by Centre

Amid the pleas alleging media trials, the Division Bench had been hearing submissions of the News Broadcasters’ Authority (NBA). It prayed that severe restrictions...

Himachal Pradesh High Court Supports Promotion Based on Seniority of Post Rather Based on the Eligibility Test

In the case of Ramesh Chand Versus State of Himachal Pradesh & Others, the petitioner, reached the court as he was aggrieved by the...

NCDRC Dismisses PIL against Urologist, Holy Family Hospital, Says Mode Of Treatment Or Skill Differs From Doctor To Doctor

The National Consumer Dispute Redressal Commission (NCDRC) dismissed a petition against Holy Family Hospital and a Urologist, alleging negligence in diagnosing the septicemia and...

Himachal Pradesh High Court Disposes Suit for Possession and Permanent Prohibitory Injunction Due To Mutual Consent

In the case of Parveen Kumar vs Smt. Vijay Laxmi and Ors, the Petitioner, Parveen had filed a suit for declaration, possession and a permanent prohibitory...

Supreme Court Appoints Committee To Examine Arbitrariness of Sealing of Resorts in Elephant Corridor, Tamil Nadu

A Full Bench headed by the Chief Justice of India, in the matter of Hospitality Association of Mudumalai V. In Defence of Environment and Animals...

More Articles Like This

- Advertisement -