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The ‘Irresistible Compulsion’ Of Corona: A Detailed Study Of The Application And Interpretation

The ‘Irresistible Compulsion’ Of Corona: A Detailed Study Of The Application And Interpretation Of Force Majeure, Amid Covid-19

Anisha Arya, BVDU’NLC Pune


The Law of contracts gives autonomy to the parties to decide their rights and duties subject to certain guiding principles relating to proposal, acceptance, competency, performance, and its enforceability. Sir William Anson explained the object of the law of contract in his words, “the law of contract is intended to ensure that what a man has led to expect shall come to pass; that what has been promised to him shall be performed.” However, the law also takes into account the possibility of the performance of the contract becoming impossible due to a supervening, unforeseen event, which will frustrate the commercial purpose of the contract or hit at the very root of it.

With COVID-19 being declared as a Global Pandemic by the World Health Organization (WHO), and as the governments mandate social distancing practices, lockdowns, instruct businesses to close— to slow the spread of the outbreak— it soon came to be labeled as an “Act of God.” The author is inspired to write the present article from an article which appeared in The Economist called, “A force to be reckoned with”, highlighting that, with the dawn of lockdowns all over China due to the viral outbreak, the “worry of the scapegoat” used by the Chinese enterprises using an “obscure legal maneuver” of claiming force majeure—would soon turn into a “tidal wave”, enabling firms to set aside contracts for unjust reasons.”[1]

The present article deals with the subject of whether Covid-19 had saved parties from a breach of contract by invoking a force majeure, and whether Covid-19 had paved the way to embrace the legislations of force majeure in India.

Keywords: Frustration, Force Majeure, Indian Contract Act, Section 56, Section 31, Covid-19.


“Frustration” and “impossibility” are often used synonymously. The doctrine of frustration is an English Contract Law doctrine which aims to set aside contracts where an unforeseen event either renders the contractual obligations impossible or radically changes the party’s principal purpose for entering into the contract, without incurring a liability on part of the defaulting party. Previously, it was governed by the rule of ‘absolute liability, under which a party was bound to perform the obligations undertaken by him, notwithstanding a subsequent impossibility. This absolute rigidity of the law of England was loosened by the Caldwell case.[2]

In Taylor v. Caldwell[3], Blackburn J. constructed the precept in its modern form. The court held that where the parties have contemplated a particular thing as sine qua non to their contract, then the parties shall be excused, in case, prior to breach, performance becomes impossible from perishing of the thing without the default of the contractor. Accordingly, the defense of frustration of contract covers the unforeseeable and unanticipated circumstances; which are (i) beyond human control, and (ii) could not have been prevented with due care or foresight.[4]

While English law of frustration is affected by the fluctuations in the judicial pronouncements, the Indian law on the other hand stands crystallized on the subject. In India, the doctrine is governed by Section 56[5] of the Indian Contract Act, 1872, which denounces any contract of initial or subsequent impossibility as void. A strict reading or interpretation of the section suggests that; it is an “exhaustive code” of a permissible discharge[6] (as principally laid down in Satyabrata Ghose v. Mugneeram Bangur[7]). It must be noted that the word ‘impossibility’ here does not refers to a literal impossibility of performance, but a supervening event that renders the performance impractical and the object of the contract useless.

Although the clause of frustration is invoked by the parties themselves, it is subject to courts’ discretion to decide whether an intervening event was so fundamentally striking at the root of the contract, to render its purpose altogether void. Thus it depends on case to case basis, taking into account the circumstances and time of the formation of the contract, the intention, and knowledge of the parties, etc. The judicial interpretations have tended to an understanding that a mere happening or non-happening of an event won't constitute an impossibility if it only tends to make the contract onerous or its performance expensive and difficult to be carried out.

An occurrence to constitute a frustrating event must be proved to have struck at the very basis of the contract. The Indian courts, as compared to their English counterparts, are more reluctant to invoke the doctrine so as to forbid the parties to take advantage of the loopholes in the legal system and find an escape-route for their non-performance, in case the contract becomes a bad bargain for them. Hence, holding the sanctity of a contract in high spirits, there exists a very high threshold to claim the benefit of this defense under Indian courts. These narrow limits of the doctrine’s application are the reason why contracting parties often resort to a force majeure clause.

The expression ‘Force Majeure’ is a French term which means “a superior force.” Even though there can be no water-tight compartmentalization of the term, Black’s Law Dictionary[8] defines it as “a superior or irresistible force.” One can say, in simple words, it is an event or effect that can be neither anticipated nor controlled, or one which prevents someone from doing something that he or she had agreed or officially planned to do under a contract, owing to its un-foreseeability. Unlike the doctrine of frustration, the force majeure clause got impetus from the Civil Law System.

A force majeure clause is a contractual prescription where the parties pre-decide the events which are to be included within the ambit of a force majeure, to protect them in case of non-performance on happening of that event; hence, the clause may differ in its range and scope from case to case. For instance, an unexpected increase in prices of raw material and shortage of labor did not constitute a frustrating event in David Contractors Case[9], but for a commercial contract an abnormal increase in prices shall constitute a force majeure clause, thereby expressly bringing it within the concept of frustration, notwithstanding the legally defined scope of impossibility.


1. There must be validly enforceable contract (a contract to discover treasure by magic[10] is void-ab-initio),

2. The performance of the contract must have become impossible,

3. The impossibility was the cause of a unexpected event/ supervening impossibility, for instance, destruction of subject matter in war, contract becoming illegal due to intervention of law, etc.

4. The application depends upon judicial interpretation.


1. Occurrence of an unforeseen intervening event,

2. The event must make the performance of the contract impossible/impractical,

3. The parties had contemplated the discharge of liability in case of occurrence such an event

4. The party whose performance was affected by the force majeure event/ the defaulting party has a burden to prove the above 3 elements.


The force majeure clause differs from the law of frustration in the sense that it does not automatically renders a contract void, rather gives a scope of contractual modifications to the parties, in times where the performance become impossible due to a supervening event. The parties can then flexibly fashion a change in the modus operandi of their performances. Therefore, a force majeure event does not excuse a party’s non-performance entirely, but only suspends it for the duration of the force majeure. Whether a court may or may not upheld a force majeure event depends completely on what the clause says and how. A court looks at the language of the clause and the intent of the parties to decide whether a particular event can come within the ambit of the clause. In other words, the draft/language of a force majeure clause will dictate its application, scope, range, and effect.

In Housing Development and Infrastructure Limited v. Mumbai International Airport Private Limited[11], the Bombay HC demonstrated the importance of a clearly drafted and detailed identification force majeure event, complied with procedural requirements, for instance, the dates of commencement of the event, the estimated cessation of the event must be set out, etc. A distinguished jurisprudence on the subject has been stated by Justice RF Nariman in the case of Energy Watchdog v. CERC[12] soas to include any express or implied clause within the contract making it contingent in nature. Thus on happening of an event under Section 32[13] of the Contract law, the contract is to be dissolved on its terms but if a force majeure event dehors the clauses of a contract, it is to be dealt with ‘a rule of positive law’ under Section 56 i.e. the contract is to be ‘deemed’ as frustrated.

Professor McKendrick concluded in the case of Super Servant Two[14], “a contracting party who wishes to be relieved from his or her obligations to perform in a wider range of circumstances that may constitute frustrating occurrences, must negotiate for the inclusion of a force majeure clause if he or she seeks to benefit from the narrow confines of frustration as generally defined.” The above statement well endows upon the narrow confines within which the doctrine of frustration functions and the benefits which a party can derive from a carefully crafted force majeure clause.

An analysis report by Clyde & Co. made an interesting yet important inference that the key elements for deciding a force majeure are:- first; externality, the event must not be cause of human conduct i.e. by the parties themselves, second; unpredictability, the event must not be one which can be prevented by due care and foresight, third; irresistibility, the cause/event must make the performance/purpose of the contract wholly impossible.


Covid-19, which is a breath-taking, blink of an eye, looks to have unleashed an economically destructive force globally, for which the world was unprepared and has raised many claims of a force majeure. Not only Covid-19, but scenarios like one of blockage in the Suez Canal due to a giant container ship—leading to delay in the international supplies all across Asia and Europe, increase in freight and cargo charges in case of alternative routes via Cape of Good Hope, the consignee of cargo and owners of the ship may claim a force majeure, in recourse to the unforeseeable economic consequences which have occurred.

But its effects namely, lockdowns, shutting down of businesses, social distancing, work from home, etc. seems to only temporarily affect a contract, until and unless time was of essence to the agreement. It is because the law of frustration assumes responsibility and obligation of a risk of the performance becoming onerous or expensive on the contracting parties. This is why Covid-19, though have wrapped the international and domestic trade by the pummelling effects of the economic downturn, being completely unpredictable in its extend, range, scale, length of time, and severity, might constitute a pandemic but not a force majeure in every case.


The Ministry of Finance vide its memo dated 19th Feb. 2020 stated that Covid-19 can be considered a force majeure in respect to the contracts dependant on supply chains but it is no blanket protection for all commercial contracts. It further interpreted that while applying a force majeure clause, the following two criteria must be kept in mind:

1. Whether the contract consisted of a force majeure clause, if yes, it is to be dealt with under Section 32.

2. If not, whether the aftermath of the outbreak upset the commercial purposes and viability of the contract fundamentally thus to be treated under Section 56.

The Ministry of New & Renewable Energy (RE), directed the Renewable Energy implementing agencies to grant extension in the scheduled commission of RE Projects due to supply chain disruptions. However, since the above notifications cover only a confined range of contracts; the decision still depends on the understanding of the events/interpretations included in the force majeure clause stipulated in a contract. Since Indian courts are not inclined to grant a decree of frustration to a contract on any trivial ground, force majeure has come into scrutiny under the existing commercial contracts.

A force majeure clause can be of two types; Exhaustive, including the primary/boilerplate events which can constitute a force majeure namely, war, an act of god, strike, riot, crime, epidemic, etc. and, Inclusive, which inter alia aforementioned events would include encompassing ‘other similar events’. According to the rule of ‘ejusdem generis’ comes into the picture, which states that when a specific clause is followed by a general one, the general expression is to be interpreted within the scope of characteristics of the specific expression. For instance, if the contract’s force majeure included the expression of ‘other similar contagious disease like SARS,’ one may argue that it extends to include the outbreak of Covid-19 as well.

When commercial contracts immunes a party from non-performance due to an ‘Act of God’ or ‘pandemic’, there is no doubt that Covid-19, which could not have been predicted by anyone and is neither within human control will be interpreted to be included within the force majeure events. Similarly, most contracts immune their parties from ‘sudden change in law’ or ‘Act of Government’, which will cover the unpredictable proclamation of nationwide lockdown in the country. The Indian judicial lens, however, has been pretty blurred for how they look at the subject of force majeure during Covid-19.

The courts witnessed an onslaught of performance bond disputes revolving around the force majeure clause, but the courts have not been static in their approach towards judging whether the language of a particular force majeure clause encompasses the spread of the coronavirus. A recent judgment in the case, M/s Halliburton Offshore Services Inc. v. Vedanta Limited[16], where the Indian courts took a positive step in evolving force majeure jurisprudence, considered the nationwide lockdown as to constitute a prima facie force majeure and hence putting a stay on invocation of bank guarantees. In another case, Rural Fairprice Wholesale Ltd. & Anr. v. IDBI Trusteeship Services Ltd. & Ors.[17], the Bombay HC granted interim relief to the petitioners on account of the downturn in the market situation amid coronavirus, due to which the value per share was lost up to INR100.

On the contrary, in Indrajit Power Pvt Limited v. Union of India & Ors.[18], the petition seeking a restraining order for the Central Government in invoking bank guarantees was rejected, stating that a twelve-month extension was already granted before the imposition of the nationwide lockdown and mere financial distress caused during the lockdown could not spare them from their continued default to pay the dues. The above ruling seems to concur with the judgment in Standard Retail Pvt. Ltd. v. M/s. G. S. Global Corp & Ors.[19], where rejecting petitioners’ plea to sought direction retraining the respondent bank from encashing the letters of credit on the claim that Covid-19 frustrated the contract, the court provided that, “lockdown cannot come to the rescue of the petitioners to release them from their obligations of making payments.”

The Delhi HC also delved into the legal position of the force majeure into rent/lease deeds. In Ramanand & Ors. v. Dr. Girish Soni[20], the court held that a tenant if wishes to surrender the flat to the landlord, can invoke an existing force majeure clause. However, if the tenant retains the flat, he can be provided with a relaxation of time for payment of rent, but force majeure will not apply.


In the light of the foregoing, the following can be understood:-

1. The Law of Contract is majorly governed by two principles, Pacta Sunt Servanda provides that agreements must be kept in good faith (as described in the Vienna Convention, 1963) and Rebus Sic Stantibus, which upholds the discharge of binding contractual obligations on the parties. These two are by far the oldest principles of contract law which aids in understanding the force majeure clause.

2. Law of frustration, under Section 56, is a positive law that casts a duty on the courts to decide whether the occurrence or intrusion of an event was so fundamental to the contract so as to set aside its whole purpose.

3. Whereas the force majeure clause, which finds its genesis under Section 32 of the Indian Contract Act, 1872 serves as a reprieve to the parties in times of non-performance due to a supervening event. The onus rests on the affected party to prove that the performance was wholly impossible and that the cause was not self-induced.


In the era of scientific innovations and inventions, none could have thought that a sub-microscopic virus will bring the world to a standstill. Commercial ramifications of Covid-19 have led to a great deal of discussion on whether the performance became impossible, affirming the benefit of the sections or it just became a bad bargain for the parties. Even in the contracts consisting of a force majeure clause, its applicability and invocation amid Covid-19 is akin to be adjudged on the interpretation and construction of the clause. Economic hardship is one of the most devastating and attacking repercussions of Covid-19, governments are struggling to save the economic graph while the GDP kept declining. However, ‘economic hardship’ in itself is most unlikely to bring a force majeure into action.

For instance, a fall in the value of a currency due to Covid-19 is not a force majeure in its own. Hence, it is high time that instead of such peal meal notifications, we have a codified law on the subject of force majeure. While it can be understood that the Indian perspective has been rather restrictive in upholding the frustration of a contract, it is important to have a more concerned and vivid approach to the factors that unavoidably affected the performance of domestic and international contracts, to save the vulnerable parties from injustice, to protect the rights of parties from being held liable for non-performance, with absolutely no fault of their own.

[1] Siddharth Raja, A Tale of Two Things — Of Frustration & Force Majeure Clauses in the time of COVID-19, THE SCC ONLINE BLOG, (Apr 6, 2020), [2] Dr. ASHOK K. JAIN, LAW OF TORTS WITH CONSUMER PROTECTION ACT, (9th ed., 2018). [3] (1863) 122 Eng. Rep. 309. [4] Dr. ASHOK K. JAIN, LAW OF TORTS WITH CONSUMER PROTECTION ACT, (9th ed., 2018). [5] Indian Contract Act, 1872, Section 56 Agreement to do impossible act.—An agreement to do an act impossible in itself is void. —An agreement to do an act impossible in itself is void. "Contract to do act afterwards becoming impossible or unlawful.—A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.1 —A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful." Compensation for loss through non-performance of act known to be impossible or unlawful.—Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise. —Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise". [6] Siddharth Raja, A Tale of Two Things, supra note 1. [7]AIR 1954 SC 44 (India). [8] HENRY CAMPBELL BLACK, BLACK'S LAW DICTIONARY, 774, (4th Ed. Rev., 1968). [9] Davis Contractors Ltd v. Fareham Urban District Council, (1956) AC 696 (UKHL). [10] Indian Contract Act, 1872, Section 56 Illustration (a). [11] (Arbitration Petition (L) No.902 of 2013). [12] (2017) 14 SCC 80 (India). [13] Indian Contract Act, 1872, Section 32 Enforcement of contracts contingent on an event happening.—Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. —Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened." If the event becomes impossible, such contracts become void. [14](1990) 1 Lloyd's Rep 1. [15] Tarun Dua & Geetanjali Sethi, Force Majeure In Times Of COVID-19: Challenges And The Road Ahead, MONDAQ, (May 11, 2020), . [16] O.M.P. (I) (COMM)& I.A. 3697/2020. [17] Commercial Suit (L) 307 of 2020. [18] W.P.(C) 2957 of 2020. [19] ARBITRATION PETITION (L) NO. 404 OF 2020. [20] RC. Rev. 447/2017.


Indian Journal of Law and Legal Research

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ISSN: 2582-8878


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