Author: Anushka Ukrani

Co-author: Himanshu Anand


We are living through unprecedented times. The WHO-declared pandemic COVID-19 has spread to 213 countries and territories, with 7446229 cases around the world. India itself has 287155 positive cases. Considering the seriousness of the crisis the countries have adopted various measures such as imposition of travel bans, denial of entry to ships at ports, stringent screening, quarantining suspects and patients and isolating the infected ones in order to stop the spread of the virus. These restrictions have resulted in a major slowdown in economic activities and have caused a disruption in the supply chain. The restrictions on movement have made the performance of contractual obligations difficult and in some cases even impossible. Thus, considering the circumstances, it is important to ask the question whether the coronavirus outbreak is a Force Majeure event or an act of god, and can therefore, be used as a defense by non-performing parties to avoid liability under a contract?


Black’s Law Dictionary defines ‘Force Majeure’ as ‘an event or effect that can be neither anticipated nor controlled. It is a contractual provision allocating the risk of loss if performance becomes impossible or impracticable, especially as a result of an event that the parties could not have anticipated or controlled.’ Force majeure operates in situations that are beyond the control of the parties such as wars, strikes, and even acts of god.

Though the term force majeure and act of god are often confused, they are quite different in terms of their meanings. ‘Force majeure’ has a much wider scope than ‘act of god’, in the sense that act of god includes those inevitable accidents which are caused by natural forces without any human intervention whereas force majeure includes both accidents caused by natural forces as well by human agency as long as it is beyond the control of the humans involved.

The purpose of a force majeure clause is to absolve the parties from contractual obligation in case the performance becomes impossible due to unforeseen circumstances. The Indian contracts act, 1872 (hereinafter referred to as ‘the act’) nowhere expressly provides for ‘force majeure’, however, Sections 32 and 56 of the act are relevant in this regard.

In order to constitute a force majeure event the following requirements must be fulfilled:

  1. The event is unexpected and beyond the control of parties.
  2. The event must be such as which makes the performance of contact impractical/impossible.
  3. No reasonable steps could have been taken to avoid/mitigate it.

Thus, an inevitable occurrence or event which is beyond the reasonable control of the parties is the gist of force majeure.

The doctrine of frustration is enshrined in sec 56 of the act and is based on the maxim “les non cogit ad impossibilia”(i.e. a man cannot be compelled by law to do what he cannot possibly do). It provides first, that an agreement to do an impossible act is void and secondly, a contract to do an act, which becomes impossible subsequent to the formation of a contract, or unlawful due to an event the occurrence of which is beyond the control of parties, becomes void. This section comes into play only when there is no express or implied ‘force majeure’ clause in the contract.

In Satyabrata Ghose v. Mugneeram Bangur & Co. the supreme court examined the scope of section 56. In this case, the plaintiff and defendant had an agreement for sale of a piece of land which unfortunately was compulsorily acquired by the military during the 2nd world war. Now the question was whether the agreement was frustrated as a result of the acquisition. The court held that based on the facts and the nature of the agreement, the existence of wartime conditions at the time of its formation and the kind of development, the contract had not been frustrated as its performance could be deferred till after the war. The following principles were laid down:

  1. The impossibility in section 56 need not be physical or literal in nature.
  2. The performance can be suspended if it becomes impractical or useless considering the object and purpose of the contract even though performance may not be literally impossible.
  3. The event should be such as would totally upset the very foundation on which the contract had been formed in order to cause frustration.
  4. Sec 56 would apply only in those cases where there is no express or implied force majeure clause in the contract. In all other cases the dispute will be analysed based on the clause.[2]


The Office Memorandum no. F.18/4/2020-PPD dated 19.02.2020 issued by the Department of Expenditure, Ministry of Finance, Government of India, clarified that the breakdown of supply chain due to the pandemic will be a force majeure event. It also urged the state governments to frame guidelines to prevent the spread of virus in the coming 21 days. As a result different state governments and authorities issued various directions.

The important thing to remember here is that the outbreak of the pandemic by itself does not constitute a force majeure event. It is the resulting restrictions in the form of lockdowns, travel bans, restriction on movement of people and materials and so on that may constitute a force majeure event. So the issue that arises is whether the pandemic and the resultant restrictions/measures are such that they constitute a force majeure event and hence excuse a party from performance of his contractual obligations?

Now there can be no specific answer to this question. The decision will depend on the facts and circumstances of each case. Special attention will have to be given to the  terms and language of the force majeure clause in the contact. Mere financial difficulties will not satisfy the test of force majeure. This clause cannot be used as a blanket protection in all cases where a breach is contract has taken place subsequent to the outbreak. For instance, recently the delhi high court in Halliburton Offshore Services v. Vedanta Limited, stopped vedanta from invoking guarantees as performance was impossible because it involved foreign travel, and thus held that lockdown due to COVID19 is a force majeure event. Whereas the Bombay high court in Standard Retail Private Limited v. M/s. G. S. Global Corp & Ors. , rejected a plea under section 56 as even during lockdown distribution of steel is an essential service and hence there is no restriction on it. Therefore, relief under force majeure cannot be claimed.

Thus, this makes it clear that force majeure cannot be used as a blanket protection in all cases. Its application will depend on a variety of factors. The burden of proof is on the party seeking exemption from performance. The party has to prove that it had no control over the event and that it had taken all reasonable measures to avoid it. The party must also show that there is a direct causal link between the event and the resultant impossibility.

In cases where the contract consists of a force majeure clause, the remedies will depend on the structure and language of the clause itself. Some contracts provide for termination while others only postpone the performance until the situation changes. In cases where there is no force majeure clause in the contract, relief can be sought under sec 56 of the act. However the burden of proof is higher under this section. The party claiming relief has to show that the pandemic has altered the foundation of the agreement.

Another situation can be where there is a force majeure clause in the contract but it is so narrowly worded that it does not cover the pandemic in its ambit. In those situations the only course available will be renegotiation of terms, which is generally not possible. So parties will certainly be at a disadvantage in such cases.


In conclusion it can be easily said that the pandemic has caused such a situation that a lot of contracts will stand suspended, if they consist of an exhaustive force majeure clause and parties will be exempted from performance if they are able to discharge the burden of proof sufficiently. However there can be no straitjacket formula to determine the same. The remedy in each case will depend on the individual facts and circumstance of that case.