Force Majeure (FM):- Means extraordinary events or circumstances which is beyond human control, and even described as act of god like natural calamity.

The Ministry of Finance (Department of Expenditure Procurement Policy Division) has issued a clarification that corona virus will be covered in the force majeure clause (FMC) and should be considered as a case of natural calamity.

Effects on contract in international transactions:-

A Force Majeure clause in the contract frees both the parties from contractual liability from fulfilling obligations under the contract. However, force Majeure clause does not excuse the non-performance entirely. But, suspends the execution for the duration of the force majeure. Moreover, if the performance of the contract is prevented or delayed for a period of more than 90 days, either party may at its option terminate the contract without any financial liability on either side due to such non-performance.

Key takeaways:-

In case of any contracts, where party failed to fulfil the obligations mentioned in the contract due to the reasons like Corona virus, then the contract is voidable at the option of either party after the period of 90 days from the date of event causing non-performance. This non-performance of obligations after specified period doesn’t attract legal liability of any kind.