COVID-19 pandemic has brought many unseen problems that we were not prepared for and most of us have not gone through any epidemic/pandemic so this generation is struggling to keep up as this pandemic strengthens. One of the consequence is that we are forced to stay in our households because staying inside is the only thing that will keep us from getting infected, due to this market of online products and services is on the high rise on the other hand real market is facing recession because of lock down. Suppliers were not able to supply goods on time and many contracts and agreements were breached because of lock down and now many want to assess their rights and remedies to know the liability and determine the penalty.
ACT OF GOD
Act of God is defined as “overwhelming, unpreventable event caused exclusively by forces of nature”. In the times of pandemic due to uncertainty of lock down, problems in the performance of contracts are raised. Parties who have a lot of unperformed contracts are taking defense under section 56 of Indian Contracts Act which states “frustration” as an act outside the control of party by which the performance of their part becomes impossible. The event should make the contract impossible to perform otherwise no relief should be applicable. In some cases parties try to get wrong relief when they didn’t perform their part of contract under section 56 of the act.
In Indian law there is never been a case where they have ruled any pandemic as an act of God still, the court has supported the act of God in The Divisional Controller, KSRTC v Mahadeva Shetty And Anr. By expressing the act of God as the operation of natural forces free from human intervention such as snowstorms, cyclones, etc. But every mere wind or rain does not operate as an excuse from liability. An act of God provides no excuse unless it is so unexpected that no one could be able to anticipate the occurrence, having regard to the conditions of the time.
Change in the process of performance cannot be considered as a force majeure. In the case of, Energy Watchdog v Central Electricity Regulatory Commission, the Supreme Court held that if the fundamental basis of the contract is unchanged, merely a change in a factor of the contract i.e. an increase in price cannot be constituted as a force majeure event.
In the recent case of Vedanta v. Halliburton the court has evoked the force majeure to remove the penalties that are being put on the business for the excused performance of contract by weighing the contractual obligations and performance of the business. In the International case of Lakeman v. Pollard, a worker left the working area after completing his daily work before the due time, because cholera epidemic was going in that area and it was a highly contagious disease. The court held that in a case of contagious disease like cholera can be a genuine excuse for delaying or breach of the performance of labour contract.
To conclude, Indian courts have acknowledged the statement that Covid-19 will be counted as an act of God as to the cases decided in the past and recent. The courts have not directly shown assertion in the statement but in the case of Vedanta v Halliburton the relief was granted directly to the cause of the pandemic. And if Indian court will take reference from Lakeman v. Pollard, an epidemic can be a direct consequence for not completing your part of the contract because life holds more weight in the eyes of law, so no liability arises.
Veerashwar Singh Jadaun is a student at University of Petroleum and Energy Studies. He can be contacted at veerashwar@gmail.com
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