Scroll Top

search-icon
    drop-arrow

    Force Majeure

    Introduction

    Force Majeure refers to an extraordinary event or circumstance, which is out of the ordinary control of human beings. A clause on ‘Force Majeure’ is usually a part of business contracts to provide for uncertain events disrupting the execution of a contract. The clause relieves the liabilities of the parties to a contract in the event of an unforeseen event.

    Understanding Force Majeure

    A clause on ‘Force Majeure’ in business contracts removes the obligations to perform under the contract of either or both contracting parties. Unforeseen events generally consist of pandemics, super-volcano, and nuclear warfare, among others. The events are not foreseeable to the parties entering into the contract. The parties may agree to an inclusive list of events which are not in control of the parties.

    ‘Force Majeure’ is a French term which means “greater force”. The main criteria for invoking ‘Force Majeure’ are: 1. The event must be unforeseeable and beyond the control of the parties 2. The event may lead to an impossibility of performance of obligations under the contract 3. The affected party takes all the necessary steps to mitigate the effect of the event

    The clause ‘Force Majeure’ provides relief to the parties from the performance of their obligations under the contract. In the event of the occurrence of an unforeseen event, either party can give notice to the other informing about the event. They should also express their inability to perform their obligations under the contract and state that they are invoking the clause ‘Force Majeure’.

    Parties should seek legal advice while invoking the clause ‘Force Majeure’ and ascertain the impact on their business. The parties cannot sue each other or claim damages for non-performance of the contract. In a case where the unforeseen event continues for an extended period, the parties may renegotiate the terms of the contract or may terminate the contract.

    Conclusion

    The clause ‘Force Majeure’ brings a situation that makes it difficult to carry out the obligations and provisions of a business agreement or contract. In many jurisdictions, the clause refers to a list of events based on the local issues or threats faced therein. The application of the concept may then be limited. However, in international contracts, the clause may cover all unforeseeable external events.

    Index

    Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

    Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

    CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

    Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

    Cleartax is a product by Defmacro Software Pvt. Ltd.

    Company PolicyTerms of use

    ISO

    ISO 27001

    Data Center

    SSL

    SSL Certified Site

    128-bit encryption