Principle of Force Majeure
It is a French term meaning “greater force”. It refers
to an event that situations are unforeseeable or an activity that cannot be anticipated
or controlled and in general refers to an activity of God. This principle is
studied in contracts to escape the liability for unavoidable activities which prevented
the parties from fulfilling the obligations of contract but the non-performance
must be not because of negligence or any other such reason. This means that the
party that failed to perform the obligations of contract will not be sued by
the other party for the non-performance.
The principle of Force Majeure covers natural disasters as well as human
activities such as situation of war, terrorism, epidemics etc. Force Majeure
includes acts of god but also covers artificial unforeseen events. The
difference between “Act of God’ and “Force Majeure’ is also recognized by the
Supreme Court in the case of Dhanrajamal Gobindram V Shamji Kalidas &
Co[1].
It is a contractual provision added to pardon the party who is unable to
fulfill the contractual obligations because it becomes practically impossible
for the party to continue with the performance under special circumstances that
are uncontrollable and unanticipated.
There are certain ingredients that must be present
for an event to constitute force majeure which are that the event must be
unforeseeable and inevitable, beyond the control of parties and the situation
must be external to both the parties and it becomes practically impossible for
the party to fulfill the conditions of the contract. Here it is important to
note that mere unanticipated difficulty is not enough to constitute the
situation of force majeure and excuse the non-performance. Also, economic
hardships in general are not recognized as an event of force majeure because
every economy goes through various cycles of boom and depression and hence
economic distress regularly occurs in business.
While in Indian law, ‘Force Majeure’ is not
specifically dealt with, its reference can be found in Section 32 of the Indian
Contract Act 1872 which states that if the contract is based the contingent
on the happening of certain events, which later becomes impossible them such
contract becomes void. Section 32 of the Contract Act talks about the contingent
contract and provides that the contract shall be enforceable only on the
happening or occurrence of certain unforeseeable future events and if such event
becomes impossible, then the contract becomes void. According to Section 56 of
the act, the contract becomes void if it becomes impossible for the party to
render the contract by an event. It deals with the frustration of a contract. This
section was upheld and the principle was laid in the case of National
Agricultural Cooperative Marketing Federation of India v Alimenta S.A.[2]
Force majeure is different from the frustration of a
contract. According to the doctrine of frustration, the failure of a party to
perform its contractual obligations is related
to the occurrence of an event that happened after the contract was signed but
that event was not anticipated at the time the contract was signed. However, in
the case of force majeure, parties often include a comprehensive list of
circumstances that could result in the force majeure provision becoming
applicable prior to the execution of a contract. In Nafed vs Alimeta[3], the difference between Frustration of Contract and Force majeure was clarified as
force majeure is the assumption of the threat of a supervening event before the
contract is actually executed, whereas frustration of contract is the
intervening event frustrating the contract or making it impossible for the
party to perform the act after the contract is executed.
In the case of Satyabrata Ghose v. Mugneeram
Bangur & Co.[4],
it was held that the word ‘impossible’ used in Section 56 does not necessarily
mean physical or literal impossibility to perform the act but it may be
impracticable to perform the act from the point of view of the parties and
their objectives. It was further held that the situation related to force
majeure will be dealt by section 32 while if frustration of contract taked
place, then that will be governed by Section 56 of the Indian Contract
Act.
In Standard Retail Pvt. Ltd. vs M/s G. S. Global
Corp & Ors[5],
where apart from question of fact and factual foundations of the case, Bombay
High court gave a ratio decidendi as mere hardship to the parties in carrying
out the contract is not covered under the definition of impossibility and
disqualifies the parties from receiving relief under the force majeure clause. Mere
hardship is simply a difficulty for the parties in performing the obligations of
the contract where the object and purpose of the contract still can be achieved
through performance.
In case of Hindustan Steel Works Construction
Ltd. vs Tarapore & Co. and Ors.[6]
court held that the relief (injunction) under force majeure is given to
plaintiff because if relief is not granted, then in absence of any such relief
the plaintiff will suffer an irreparable harm due to the non-performance or
termination of the contract. Furthermore, even though such reliefs are granted
by the courts, but the parties of the contract still need to adhere to some
conditions and guarantees.
SNEHA
3rd year B.A.LLB, Army Institute of Law
[1] AIR 1961 SC 1285
[2] CIVIL
APPEAL NO.667 OF 2012
[3] Nafed
vs Alimeta, Civil Appeal No. 667 of 2012.
[4] MANU/SC/0131/1953
: 1954 SCR 310
[5] Standard
Retail Pvt. Ltd. vs M/s G. S. Global Corp & Ors, Commercial arbitration
petition (L) No. 404 of 2020.
[6] Hindustan
Steel Works Construction Ltd. vs Tarapore & Co. and Ors. 1966 SCC (5) 34,
JT 1966 (6) 295
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