Force Majeure

Category: Indian Economy — Contracts and Legal Concepts

Force majeure refers to extraordinary circumstances beyond the reasonable control of parties that prevent or substantially affect the performance of contractual obligations.

Key facts

  • Examples may include severe natural disasters, war, certain government restrictions and other exceptional events.

  • Its effect depends on the wording of the contract and the applicable law.

  • A force majeure clause may suspend obligations, extend deadlines or permit termination in specified circumstances.

  • The event generally must fall within the clause and satisfy its applicable conditions.

  • Financial difficulty or an increase in costs does not automatically qualify as force majeure.

Indian legal context

  • Section 32 of the Indian Contract Act, 1872, may apply where contractual terms provide for specified contingencies.

  • Section 56 concerns impossibility or unlawfulness arising after a contract is made, often discussed under the doctrine of frustration.

  • Force majeure and frustration are related concepts but are not identical.

UPSC key pointers

  • Force majeure does not automatically cancel every contract affected by a crisis.

  • The contractual wording and facts of each case matter.

  • The COVID-19 pandemic did not automatically excuse all contractual non-performance.

  • Distinguish contractual force majeure from the doctrine of frustration under Section 56.