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Old wives’ tales have it that in the event Hell falls or water rises, you must do you job, no matter what. If you are a party to a contract where the performance of which was interrupted because of the outbreak of the virus— you ought to pull that contract out and look for that section of your contract that talks about whether you can be excused for not doing your work during the lockdown . Although not headed as such, the fancy name the legal industry is asking you to take a peak is the clause of ‘force majeure’.
How do you recognise a force majeure clause?
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History states that the phrase was conceived to mean: an unforeseen or foreseen but inevitable or irresistible event external to the obligor which makes it impossible for him to perform the obligation concerned. In other words, if you cannot perform the contract because of a war, epidemic or harsh storm, then you cannot be held responsible for not doing your part. This will vary slightly depending on the area you’re staying, do check up with the local rules that are applicable in your state, but broadly, if the following parameters are satisfied, then force majeure may apply:
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If the event is beyond the control either of the parties; is not self-induced;
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The nature of the event must be unforeseen or foreseen but inevitable or irresistible;
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The event must make it impossible for the performance of the obligation
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Here, the underlying principle is that possibility is the limit of all obligations (ad impossibilia nemo tenetu). That is to say, you are not expected to perform the impossible. As such, you must be in a position to show that because of the occurrence or non-occurrence of the event, you could not discharge your duties under the contract. Here, it is pertinent to take note of the fact that impossibility of discharging your obligations is synonymous to impracticality of discharging them. Moreover, the partially paralysing event should not just be external, but should not be attributable to either of the parties. To gauge a general idea of the type of events that usually render a contract non-feasible, see: https://ppp.worldbank.org/public-private-partnership/ppp-overview/practical-tools/checklists-and-risk-matrices/force-majeure-checklist/sample-clauses.
Law 101
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The phrase force majeure owes its roots to the Civil Law System. Insofar as judicial interpretation is concerned, the axiom is that the clause must be construed with each case with a close attention to the words precede and follow it, and in regards to the nature and general terms of the contract. This means that obligors are exonerated only on a case to case basis. For all those who think you can hold those slackers who’ve refused to work during the lockdown, be wary of the fact that The Court will oscillate in the direction of saving the performing party from consequences he has no control of.
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As far as case precedent on this aspect is concerned, the popularly referenced case is Taylor v Cadwell.[1] In 1861, the claimant hired a music hall in Surrey for holding four grand concerts. However, a week before the first concert was due to take place, the music hall was destroyed by an accidental fire. Consequentially, the claimant bought an action for breach of contract for failing to provide the hall; sought damages for the expenses incurred. On the 6th of May 1863, The Court held that in contracts where the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance. In this regard, The Court observed that this contract merely contemplates the performance of the obligation and not the excuse of performance in case of destruction of the person or the thing; here it is pertinent to note that the excuse is by law implied, because from the nature of the contract it is apparent that the parties contracted on the basis of the continued existence of the Music Hall.
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Thus, having ceased to exist, without fault of either party, both parties were excused I.e. the plaintiffs from taking the gardens and paying the money; the defendants from performing their promise to give the use of the Hall and Gardens and other things. It is interesting to note that prior to this case, the position of the law was that a contract must be honoured whether water rises or hell falls. As far as the Indian Contract law is concerned, the relevant provisions you need to take note of is Section 29, 31,32 and Section 56 of The Indian Contract Act,1872.
Is ‘force majeure’ the same as ‘Vis Major’?
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No. Just because they maybe related does not mean they are the same. The difference in definition lies in the scope and degree of the occurrence or non occurrence of the event. Events such as strikes, breakdown of machinery may qualify to fall within force majeure and not vis major or Act of God. In other words, force majeure is interpreted as a phrase that invites a larger meaning than Act of God. In this regard, let’s say because the pandemic, the government enforces embargos; therefore you were impacted to the extent that your duties were rendered as impossible. Will this constitute as a force majeure? As per Lebeaupin v Richard Crispin and Company[2], it will fall within force majeure. Is ‘force majeure’ the same as ‘frustration of contract’?
Is ‘force majeure’ the same as ‘frustration of contract’?
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It’s mumbo jumbo like this that pays my bills. The interpretation of the letter of the law states that a contract is frustrated (and terminated automatically) when an event occurs that makes the contract simply impossible to perform, or the obligations become fundamentally or radically different to those originally undertaken. Sounds similar to force majeure right? If you’re one that has an eye for details, you’ll recognize that in order for a contract to be frustrated, the event should destroy the purpose of the contract.The crucial factor in trying to establish whether this doctrine applies to a contract is to identify the parties’ contractual obligations at the date of the contract, and how the particular event in question alters them.
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This means that delayed performance, as opposed to events that materially alter contractual obligations generally do not amount to the frustration of a contract. If the delay is particularly long, or has a serious effect on contractual obligations (such as missing an event), the impact on the obligations might be sufficient to amount to frustration.
C. Why do you need to know this?
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Whether you’re a judge, a lawyer or a law student, once this lockdown is lifted you need to be prepared to tackle the massive legal storm that is going to flutter your desk. The purpose of this entry was to introduce you to the terms that your lawyer might discuss with you. If you are interested in learning more on the fate of commercial business, I suggest you hit your history books and refresh your memory when it comes to business post World Wars and epidemics.
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If you know you cannot afford a lawyer for something like this, don’t worry, the internet can be your professor. All you have to do is spend time learning how to navigate through online legal database systems and look for cases that have dealt with delivery of shipments and cargos in the context of failure of delivery or delay of delivery. I suggest this bracket of case laws since delivery of shipments have historically been subjected to some form of contingency I.e. in the form of wacky weather or failure of shipping equipment etc.
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Plus, in the long run, with a basic understanding of this basic law, you will not sell yourself short. In the sense, you shouldn’t be picked on or bullied into something that is fundamentally exploitative and downgrades your value. I understand the economy is sinking right now, but trust the age old wisdom that states that knowledge is power. Presuming that your work was suspended because of the pandemic, with this information, believe it or not, you’ll level the bargaining playing field and make sure nobody holds you liable for something you could not do.
[1][1863]EWHCQBJ1122 ER 309;3 B. & S. 826.
[2] [1920] 2 K.B. 714.
Whiskey Justice 