• Force Majeure

Due to present COVID. Situation can a customer say because of forced Majeure they are not liable for contractual liability.they need to pay us for services already rendered.
How do I respond to their mail which states to take notice and acknowledge that due to forced Majeure they will not be liable if they are not able to fulfill their contractual obligations.
Asked 4 years ago in Business Law

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21 Answers

No body can provide a service or sale or after sale service duties in these 21 days lock down situation. A Company can postponed or give extension of 21 days of after sale service duties.

Ganesh Kadam
Advocate, Pune
12910 Answers
253 Consultations

4.9 on 5.0

Hello,

 

that is not the case. 
was there any contractor between you?

In India, the doctrine of force majeure is enshrined in Section 56 of the Indian Contract Act, 1872 (Act), wherein it is stipulated that an agreement to do an impossible act is in itself void. Accordingly, it provides that a contract to do an act which, after the contract is made, becomes impossible or, by reason of some event which the promisor could not prevent, becomes unlawful - becomes void when the act becomes impossible or unlawful.

 

 

the answer to this cannot be in a simple YES or NO. You will have to tell the facts in detail.

 

regards

Anilesh Tewari
Advocate, New Delhi
18077 Answers
377 Consultations

5.0 on 5.0

Depends on nature of transaction. Only if purchaser business has affected due to present situation, plea of FM may come into support.

Services already delivered and customer took benefit of the same dose not have this defence. 

As of now, customer liability cannot be enforce but you can claim interest on delayed payment.

Rest, everything depends on nature of business. If service deliver for self consumption of customer, FM dose not apply.

And Even if force majeure does not apply, a party may be excused from performing under other legal doctrines, depending on the governing law of the contract. These include frustration of purpose or commercial impracticability, and doctrines like hardship and changed circumstances.

Yogendra Singh Rajawat
Advocate, Jaipur
22591 Answers
31 Consultations

4.4 on 5.0

1. Well, the present lock down is indeed a ground to take plea of force majure.

2. However the applicability of this exception clause depends on the terms of the agreement and the severity of the situation. 

3. If the present lock down doesn't extend beyond a month or so then plea of force majure.

Devajyoti Barman
Advocate, Kolkata
22774 Answers
484 Consultations

5.0 on 5.0

Dear Sir,

The “Act of God” or “Force Majeure” clauses that cover a range of events — floods and earthquakes, for example — are designed to help insulate firms from the shock of the unforeseen. The literal translation of the French term comes to “superior force,” and this case, in grappling with the vagaries of the coronavirus, it seems we are indeed facing, for the moment, a force to be reckoned with, where the legal liabilities have yet to be illuminated.

The reality, he said, is that in situations facing the business world, such as with a pandemic, courts may look to the specific wording of the clause, and depending on the states in which that law applies, may interpret that language strictly.

Kishan Dutt Kalaskar
Advocate, Bangalore
6135 Answers
483 Consultations

4.8 on 5.0

Force majeure can be taken as defence for failure to complete contractual obligations within stipulated period 

Ajay Sethi
Advocate, Mumbai
94518 Answers
7485 Consultations

5.0 on 5.0

They need to pay the said liability. They can only buy some time but cannot absolve themselves from the liability

Prashant Nayak
Advocate, Mumbai
31802 Answers
175 Consultations

4.1 on 5.0

Hi 

Under Epidemic Act, present lock down is construed as an act of state.

However parties cannot  invoke Force Majeure at their whims and fancies. Each contract has be ready thoroughly to understand whether parties can invoke force majeure in present circumstances.

 

In your case , you have already rendered services to your customer, the customer is liable to make payment to you , regardless of the lock down and as such he cannot invoke the force majeure clause. 

 

At best, he can , delay the payment and he will need to bear the additional interest . 

 

Regardless of whether Force majeure clause can be invoked or not , you should do the following:

1) please check your records whether all your invoices for your services has been accepted by the customer.  If the invoices have already been accepted by the customer , the title to goods have already passed on to the customer and as such customer is liable to pay  you either at -sight or after credit period.

2)  Assuming all your invoices are pay on demand (without any credit period),  you should Issue demand notice for payment for the invoice's so accepted by them. 

3) Also, the decision to charge interest for delayed payment is a business decision (assuming you have had long term relationship with the customer, you may waive of the interest). 

 

 

4) In 90 % of Indian contracts, epidemic is NOT an act of god and lock down is also not an act of god / government . So , legal vetting of your contract will help in better legal advise.

 

Hope this information is useful.

Rajgopalan Sripathi
Advocate, Hyderabad
2173 Answers
394 Consultations

5.0 on 5.0

Dear Sir/Madam,

It is already lockdown and things are not operational as usual. This is not because of your lack of service or default on your part for meeting contractual obligations, rather due to the reason unforeseen and due to the reasons beyond your control. This is truly the "forced Majeure" and you are suggested to strongly accept their notice reply that you are not liable for meeting the demands/contractual obligations due the reasons created by COVID 19 and world level emergency. 

Ganesh Singh
Advocate, New Delhi
6757 Answers
16 Consultations

4.5 on 5.0

Yes this covid situation is a force majeure condition.

you can resehedule  contractual obligation for this.

Kallol Majumdar
Advocate, Kolkata
2837 Answers
14 Consultations

5.0 on 5.0

- Force Majeure refers to a clause that is included in contracts to remove liability for natural and unavoidable catastrophes that interrupt the expected course of events and restrict participants from fulfilling obligations.

- Further ,  In the event of such an occurrence, no party can take the defence of impossibility.

- Further it is not open for a party to bring a claim under the defence of force majeure.

- Since, in your case , Services already rendered, hence the customer cannot take plea of Force Majeure , and customer is liable to pay for the services.

Mohammed Shahzad
Advocate, Delhi
13090 Answers
195 Consultations

5.0 on 5.0

this is indeed a force majeure situation

even if the service was rendered prior to the present situation, the payment for such service was agreed to be deferred by you which is evident as you did not insist for payment simultaneously with providing the service

so it is on you to give some concession to your customer 

once the situation normalises, the contractual liability will again revive

as an option you can respond to the customer that can make the payment after the situation is under control and the lockdown imposed by government is raised, but for such period he will have to bear interest at a certain percentage on the outstanding amount which will become due when things normalise and will become payable with the the principal outstanding amount 

Yusuf Rampurawala
Advocate, Mumbai
7483 Answers
79 Consultations

5.0 on 5.0

1. no one can escape the liability because of COVID 19, however, the liability may remain suspended for a few days,

2. since yours is a private matter, you can serve the person with a legal notice through counsel or send them a professional revert to their email with the help of a lawyer

Suneel Moudgil
Advocate, Panipat
2380 Answers
6 Consultations

4.8 on 5.0

All activities have been put on hold in the entire country due to present pandemic covid-19 crisis.

There is no force majeure situation. 

You just receive the mail and be silent until the present lock down is removed on 14th April.

You can issue a reply notice to continue his contractual obligation  after that for which he cannot give any excuse or explanation. 

The current crisis cannot be considered as force majeure, if he is taking shelter under this clause, you can take proper legal action asking him to prove his claim through court case in this regard but wait until the temporary lock down is removed.

 

T Kalaiselvan
Advocate, Vellore
84711 Answers
2172 Consultations

5.0 on 5.0

Firstly check the agreement / contract whether the Fore Majeur clause is captured.

Going by the prevailing situation they can take Force Majeur and would be given leverage but not for eternity, from your side, it can be extended by 3 months as given by the government.

You can respond to their notice and extend the time for completing their contractual obligation by extending time by 2 months  / 3 months.

S Srinivasa Prasad
Advocate, Hyderabad
2876 Answers
9 Consultations

5.0 on 5.0

1. See the present condition may be Categorised as Force Majeure and they might delay paying at this stage also the courts are not functioning so in this scenario even if the payments are due or delayed because of reason of pandemic they might get benifit of same.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

Hi

You can reply that the already rendered services are to be paid. 

You can give them a 1 months moratorium to pay.

Thanks 

Rahul Jatain
Advocate, Rohtak
5365 Answers
4 Consultations

4.8 on 5.0

Force majeure is a contract clause that removes liability for catastrophic events, such as natural disasters. 

Mohammed Mujeeb
Advocate, Hyderabad
19299 Answers
32 Consultations

4.7 on 5.0

Yes it is true that contractual obligations get suspended in certain circumstances and situations. But is the pandemic specifically mentioned in the agreement?if not then they cannot shy away from their responsibility.

Rahul Mishra
Advocate, Lucknow
14081 Answers
65 Consultations

5.0 on 5.0

1. Yes customers cannot be held liable if they are not able to fulfill contractual obligations due to forced Majeure.

2. Even supreme court have extended the limitation period due to complete lockdown of country. 

Mohit Kapoor
Advocate, Rohtak
10687 Answers
7 Consultations

5.0 on 5.0

Generally, force majeure clause may be invoked by any party to a contract in unforeseeable circumstances preventing that party from fulfilling the contract. It is a good legal defence. However, your contract has to be studied in order to render proper advice.

Swaminathan Neelakantan
Advocate, Coimbatore
2773 Answers
20 Consultations

4.9 on 5.0

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