Navigating Uncertainties: The Significance Of Force Majeure Clause In Modern Contracts

Kundan Raj, Chanakya National Law University, Patna

ABSTRACT

Force majeure clauses have grown in importance in today's dynamic business environment, which is marked by hitherto unprecedented, unforeseeable and unpredictable events like wars, pandemics (like COVID- 19), etc., and other events that have a profound effect on humanity. The examples of the COVID-19 pandemic and Russian-Ukrainian War serve as evidence that many countries did not have the necessary laws that would be used to support people in the critical situation and that they had no regulations that would be used to fight the pandemic This seriously undermined several trade agreements or legality of some that never ever even reached the status of existed documents. In this study, the author focuses on a certain idea i.e. force majeure (vis major) which was a big problem for traders because there were no laws to control it. This research paper will look into the role played by force majeure clauses in curbing ambiguity and reducing risks during contractual management. This analysis focuses on the characteristics of force majeure provisions as well as aims to give readers a comprehensive understanding of their importance in contemporary contract law.

The first section of the paper explains the matters of force majeure and further, compares the legal implications of those matters in contractual arrangements. It analyses the historical development of force majeure clauses as well as their modern dimension in the drafting of contract processes. This paper is about the consideration of the nature of force majeure events which look at the way they are appraised to manage their effect on contractual claims. Also, this research paper analyses case studies and judicial rulings governing force majeure expansion by pointing out major guidelines and the precedents that influence the application and interpretation of these clauses. This article runs through the challenges and debates on impossibility provisions, like the wording, taboo clauses, and what happens when the unexpected occurs.

INTRODUCTION

In the last few years, from the breakdown of the pandemic i.e., COVID-19 to the recent catastrophes like the Russia-Ukraine war and Israel-Hamas war, these events have affected the commercial activities and the contracts related to it not only in India but in the whole world. In such mishappening, people are restrained from going to their office workplaces and performing their part of duty. In the absence of the capacity to work, people fail to fulfil their contracts which results in the breach of contract. This is the time when the defence of the principle of force majeure comes into play. Many times the defaulting party takes the defence of the principle of Force Majeure to avoid its part of responsibility.

The French term ‘Force majeure’ has been defined as “superior power, circumstances beyond one’s control, unavoidable”1. There is another similar term ‘‘vis major’’ in the legal system of the commonwealth nations. The term vis major refers exclusively to natural unforeseen events. But the definition of "force majeure" is far broader as it includes all such events whether it is natural or artificial and is a review of several decisions pertaining to the topic revealing that when the phrase is used, the goal is to shield the performer from the consequences of anything beyond of his control. However, because the phrase "force majeure" lacks a general or universal definition, parties have made various modifications to the provision during negotiation to reflect changes in the nature of business transactions with the evolution of time.

In essence, force majeure absolves the contracting parties of any duty or liability if an unusual occurrence or condition beyond their control takes place. It indicates that the contractual parties are unable to prevent damage in such circumstances. Such conditions include wars, strikes, chaos, infractions or inhuman things, events classified by the law as "Act of God such as (like cyclones, landslides, fires, floods, volcanic activities, etc.)’’2 that at one or both sides where the contractual parties are unable to fulfil their responsibilities under the contract.