Force Majeure and COVID-19

Force measure means a situation, wherein a party is unable to fulfil the contractual obligations due to unforeseen unexpected natural or accidental calamities. This particular class or condition need to be part of contracts contractual agreement to safeguard the interest of other sides. sec.56 of the Indian Contracts Act,1872 talks about this clause which explains about impossibility of performance of a contract. This is famously called doctrine of frustration. Legal maxim” less non – cogit ad impossibbilla. (law will not compel a man to do what he cannot possibly perform). Doctrine of frustration results in making a contract void and this means that a contract becomes void due to impossibility of performance of obligations by either of the parties because of unforeseen situations in the process of fulfilling the obligations.

This clause protects the interests of the party who is unable to discharge his obligations of the contracts due to an unforeseen circumstance.  COVID-19 is one such unforeseen circumstance that has affected the contacts around the world and this clause is closely linked to the present situation.

So this particular class is more effective in spandex situations like COVID-19 which The world is facing. The businesses all around the world are getting affected by this pandemic COVID-19 and it is impacting the industries and their revenue growth, their commitments to various customers across the globe by pushing the situations into emergencies. Because we have force measure classes in built in contracts And sub contracts it is becoming difficult to push then to deliver the obligations within the timeline specified as the majority of the part of the world is under lock down conditions. Due to the lock down scenario it is becoming  practically difficult 2 honour the contractual commitments delivering some goods, services where a physical presence is required etc., As the contractual a big obligations are not getting fulfilled this will result a big impact on company revenues profitability growth employee earnings per share and dividend for shareholders etc., Sir due to this pandemic situation in the globe the overall economy GDP and other financial factors are going to get affected largely in all countries and that will result in loss of employment reduction in sales and many more direct and indirect effects on companies.

            The major industry sectors which are going to get affected due to this pandemic COVID-19 are transportation industry oil industry power sector food industry entertainment industry automobile industry and of course the insurance sector. The overall Saints and revenues of these industries are going to fall down buy minimum 15 to 20 points and it takes a longer time to recover and come back to the normalcy. The researchers predict that it will take minimum 15 to 18 months for all the sectors to recover and restore their operations as earlier. This will result in a huge change in the lifestyles of consumers which in turn will impact the various business sectors like travel tourism entertainment and more importantly the fashion industry. the people will start spending for only needy things here after and the access amount which they used to spend earlier will be cut down.

Published by Tanmayi Kss

I am a first year law student.

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