The recent outbreak of COVID-19 has a devastating impact on mankind and countries globally, its outreach has also affected the trade, business and commerce of the nations. The rapid spread of the pandemic has made the Governments take eminent and vital steps to save the community along with saving the economy of the country. Amidst such policies, India took a decisive move of complete lockdown of the country which has led to disruption and closure of industries and businesses. Consequently, it has impacted the performance of contracts and obligations entered by the parties. This has endeavored to demystify the concept of Force Majeure in the commercial contracts. The current Research Paper analyses the applicability of ‘Force majeure’ clause incorporated in commercial contracts during the current pandemic outbreak of COVID-19. It further evaluates the contracts which do not have such clause and the consequences on the business transactions thereof. Lastly, the extent of limitation period of a contract is also critically analyzed.
Keywords: Contracts, Force Majeure, COVID-19, Limitation period
A contract is an agreement which is capable of being made enforceable in a Court of Law. The unique feature that sets the Law of Contracts apart from the rest, is the element of discretion exercised by the parties in forming the terms and conditions of the agreement within the legal framework. The construction of contracts gives scope to the parties, in terms of determining the rights and remedies that they can seek in case of a dispute. Contractual disputes between parties may often arise either due to a breach or misinterpretation of the conditions. A commercial dispute arises out of every kind of transaction that establishes a commercial relationship. Therefore, it can be stated that all contractual disputes are commercial disputes but not all commercial disputes are contractual disputes. Dispute resolution techniques are prescribed and governed by various legal provisions. Apart from the traditional dispute resolution method of litigation, a parallel known as Alternative Dispute Resolution (ADR) which is a wide spectrum of out-of-court forum is drawn. These include mediation, arbitration, conciliation and adjudication. Alternative Dispute Resolution (ADR) is a speedy, streamlined process that ensures procedural efficiency and confidentiality. It also eases the burden of the judiciary by reducing the backlogs, a major drawback of the judicial system. According to Section 12A of the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Court’s Act, 2015 amended recently, pre institution mediation is a mandatory pre-requisite or any aggrieved party approaching the commercial court with a pecuniary jurisdiction of Rs.3 Lakhs. This Act was established to set up commercial courts at the district and state level and govern them in a manner that guarantees speedy commercial litigation. This article will discuss commercial dispute resolutions that are available, the legal provisions and institutions that govern it, both at the national as well as international level. In addition to this, the article will address and reevaluate the issue of whether the commercial aspect of the legal system in India is effective enough to provide justice in an impartial and a prompt manner, for justice delayed is justice denied.