BLA Assignment 2

Maanvi Agarwal
BD20035
My company Name – ABC Company
As per Section -56 of the Indian Contracts Act, 1872, the provision of force Majeure can be claimed
in this situation, as ABC Company is unable to perform due to an impossible act within the time limit
set in the contract. As such, Section – 56 states that an agreement to do an act impossible in itself is
void.
The sine qua non for invocation of Section – 56 are:
a. existence of a valid contract between the parties;
b. the contract is yet to be performed; and
c. the contract after it is entered into becomes impossible to perform due to fact or law.

A per the judgement of Supreme Court in Satyabrata Ghose vs. Mugneeram Bangur and Co.:
‘The performance of an act may not be literally impossible, but it may be impracticable and useless
from the point of view of the object and the purpose which the parties had in view; an if an untoward
event or change of circumstances totally upsets the very foundation upon which the parties rested
their bargain, it can be very well said that the promisor found it impossible to do the act which he
promised to do.’
Similarly, the doctrine of frustration is based on the impossibility of performance and as per the
judgement in Tamplin Steamship Co. Ltd. Vs. Anglo-Mexican Petroleum Products Co. Ltd., the
parties of a contract shall be liberated,
‘if substantially the whole contract becomes impossible of performance or in other words
impracticable by some cause for which neither was responsible.’
Here the cause for the non-performance of the act due to the interference by the Government due to
imposition of a lockdown in the occurrence of an unprecedented and unexpected event of COVID-19.
The historical precedent for the application of Section – 56 due to application of law/interference by
government is in Metropolitan Water Board vs. Dick Kerr, in which the contract was held to be
frustrated. Due to a wartime statute to stop the work, Kerr who was supposed to build a reservoir for
the Water Board within six year, had to drop the work after two years and sell his plant.

According to a clarification issued by the Ministry of Finance of India through a memorandum:

‘a doubt has arisen if the disruption of the supply chains due to spread of corona virus in China
and/or any other country will be covered int eh force majeure clause. In this regard it is clarified that
should be considered as a case of natural calamity and FMC may be invoked, wherever considered
appropriate, following the due procedure as above.’
Thus, as the disruption to the work is no fault of ABC Company, the contract between it and Ultimate
Infrastructure Company would be void, and the former will not be held responsible for any breach of
damages. It will also not be liable to pay the amount mentioned in the LD claim or the Earnest Money
due to the void nature of the contract.