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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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