Editorial
Force Majeure in Indian Contracts: What Every Business Owner Should Know
When unforeseen events disrupt a contract, force majeure clauses determine whether a party can walk away from performance. A practical guide to how Indian courts have approached this since the 2020 lockdown.
What is a Force Majeure Clause?
A force majeure clause is a contractual provision that excuses one or both parties from performance when an extraordinary event prevents fulfillment. Common triggering events include the following.
Natural disasters such as floods or earthquakes
War, terrorism, or civil unrest
Government actions including lockdowns and embargoes
Pandemics and epidemics
The 2020 lockdown brought this clause into sharp focus across nearly every commercial agreement in India.
How Indian Courts Have Ruled
Indian jurisprudence on force majeure draws heavily from Section 56 of the Indian Contract Act, 1872, which deals with frustration of contract. In Energy Watchdog v. Central Electricity Regulatory Commission (2017), the Supreme Court clarified the following.
A mere rise in the cost or expense of performing the contract does not amount to force majeure, unless the contract itself specifies otherwise.
This means parties cannot use the clause simply because performance becomes more difficult or expensive.
Three things courts examine
Whether the event was truly unforeseeable at the time of contracting
Whether the affected party took reasonable steps to mitigate the impact
Whether the event made performance impossible, not merely impractical
Drafting Recommendations
A well-drafted clause should do four things.
Specify exactly which events qualify
Require timely written notice to the other party
Provide a clear suspension and termination framework
Address payment obligations during the suspension period
For deeper guidance on contract drafting standards, see the Bar Council of India's resources.
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