Professional Documents
Culture Documents
Impact of Force Majeure On Contracts12
Impact of Force Majeure On Contracts12
Contracts
Presentation at the Indian Council of
Arbitration
By
Mohit Saraf
Partner
Luthra & Luthra
Law Offices
Agenda
Examples
Distinguishing Features
Issues
6th December 2003
Definition
any event or circumstance or combination of
events and circumstances which materially
and adversely affect the performance of the
obligations of either Party to a contract and is
not within the reasonable control (directly or
indirectly) of the Party affected.
Civil law concept
Doctrine of Frustration
Distinguished
Frustration
Performance becomes impossible
Performance becomes illegal
Events outside the control of the parties defeat the
purpose of the contract
Doctrine of Frustration
Distinguished (Contd.)
Doctrine of Frustration
Distinguished (Contd.)
Doctrine of Frustration
Distinguished (Contd.)
Examples
Includes, without limitation :
Strikes or other industrial action;
Blockage or embargo;
Epidemic;
10
Distinguishing Features
Duty to mitigate
11
Suspension of obligations
12
Concession Agreement
Extension of term
Compensation
Supply Agreement
Take or pay liability
Construction Contracts
Contractor entitled to extension of time and/ or
compensation.
Fixed Price fixed term contract
13
Issues
14
Issues (Contd.)
Resurrection Clause
To cure inconsistent force majeure provisions
Party not to receive relief greater than that available
to the other party under associated contracts.
Mitigation
Insurance
Political Risk insurance (ECAs & Multilateral
Agencies)
Business interruption insurance
All risk insurance
Self insurance
Financial Balance
15