HOW FORCE MAJEURE CLAUSE HELPS YOU IN YOUR BUSINESS CONTRACTS DURING THE COVID-19 LOCKDOWN SITUATION.

FORCE MAJEURE- means an unforeseen event or irresistible force beyond the control of any person or state, which makes it impossible to fulfill and international obligation and is a situation refered to as emergency.

We have recently seen such an emergency situation called as COVID-19, Pandemic, which is even declared by WHO,(World Health Organization) as Emergency situation.

Force majeure in any given situation is controlled by the law governing the contract, rather than general concepts of force majeure. The law of the contract often specified by a choice of law clause in the agreement, and if not is decided by a statute or principals of general law which apply to the contract.

Force majeure is a common clause in Contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as war, strike, riot, crime, epidemic, pandemic or an event described by the legal termed as an Act of God,  prevents one or both parties from fulfilling their obligations under the contract. In practice, most force majeure clauses do not excuse a party’s non-performance entirely, but only suspend it for the duration of the force majeure.

Some causes might be like borderline cases, these must be assessed in light of the circumstances.

Any circumstances that are specifically contemplated (included) in the contract—

For example:

If you are in a Business and have entered into a Contract with the other party to perform an obligation by promising that you will be delivering certain assigned goods or services to the contracting party within a certain time bound period and due to the lockdown situation if you have not been able to conclude the contract completely by performing your part of obligations under the contract, then the other contracting party shall have a right to seek for damages against you either for late delivery or Non-performance of contract due to lock down situation of covid-19. Then How can u protect yourself from this kind of situation?

If your contract is having a Force Majeure clause as mentioned above then both the parties will be protected and you will get an exemption for this lockdown situation due to which you could not have performed your part of contract, also you can on mutual negotiation with the other contracting party seek for time extension so that the contract gets concluded between the parties.

On the hand, if your contract does not have FORCE Majeure Clause, mentioned under the agreement entered between both the parties. Then you will not have the protection as mentioned earlier. So to avoid the frustration of contract you can try to negotiate with the other party & Conclude the contractual obligations.

Therefore it is very much necessary that you should have these clauses as part o0f your Business contracts to protect oneself from the unforeseen situations.

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