Covid-19 and Impossibility of Contracts in India with Special Reference to Force Majeure

Abstract

Since March, 2020 the world is struggling with the disastrous Covid-19 pandemic. Presently, around more than 200 countries are passing through the global crisis due to Covid-19 Pandemic.  Covid-19 or corona virus has been officially announced as a pandemic by the World Health Organisation (WHO) on 11^th March, 2020. In these extraordinary times, the businesses across the globe are finding themselves in trouble and are in great losses. Some of the business are about to end up into bankruptcy. In some situations, the outbreak may render the performance of contracts impossible as a result of governmental restrictions in the form of national lockdowns to curb the spread of Pandemic. With the lockdown, everything has come to a halt except for the manufacture, supply and distribution of essential commodities and services. Likewise, the Covid-19 situation may adversely impact the execution of the contractual obligations by dramatically affecting the price of the performance and, thus, resulting in hardship or commercial impracticability. This uncertain situation has taken us back on the ancient concept in the commercial field called as the ‘force majeure’. In domestic contracts, the consequences of such non-performance would depend on the principles of national law. However, the contracts which do not contain a ‘Force-Majeure’ clause or any such similar provision shall still be governed by Section 56 (Doctrine of Frustration) of the Indian Contract Act, 1872. The present article deals with the problems relating to specific performances of commercial contracts and the legal provisions for the win-win situation of both the contractual parties in context with Covid-19 Pandemic situation.