The COVID-19 virus is dominating the news cycle, and it must also be dominating your personal and professional conversations. We at Manoj Wadekar & Associates i s no different; we are actively implementing our response to this situation to our clientele while operating i n an environment of considerable uncertainty.

We all are in this together.

At Manoj Wadekar & Associates, we are leaning on our Core Values, Commitment, Professionalism, Teamwork, Common Sense, Personal Respect and Communication. These values have guided us since our foundation.

We draw on almost 30 years of experience in helping our clients navigate through their most urgent and challenging situation. In a crisis, the foremost concerns must be personal health and safety – of our families, our employees, and ourselves. Taking care of those who contract the virus and joining the global community in taking sensible steps to slow its spread is of the utmost importance. 

Once you have addressed the critical efforts to safeguard your family and your people, you then turn to the health and safety of your business. Our firm exists to protect our client’s interest and business and help them manage through the most complex of challenges which they are facing during the present Pandemic.

We find i t necessary to give some guidelines and suggestions to safeguard your business in your interest as we all are aware that the outbreak and the rapid spread of COVID-19 has sent the shock waves across global market. It had disturbed supply chains, leading to the closure of several manufacturing facilities globally; serious disruption of road, air and sea traffic. This has led to the collapse of stock markets around the world, leading to the loss of billions of dollars. A combination of all these factors has led to a decline in the overall volume of global economic activity, forcing the world economy towards a possible recession. It is forcing Boards across the globe to confront a host of difficult questions on how business should be conducted during a global public health crisis.

The major question arises is on the impact on commercial contracts and what legal implications could arise due to supply of chain disruptions caused by COVID-19?

Given the disruption due to outbreak of COVID-19 Pandemic, this may have its effect on the performance of executability of the contracts, the loss caused due to sudden stoppage of the work, unnecessary payments/expenses when the contract is not getting performed, severe delays and its effects, impact on the rental agreement and l eave and license agreement with respect to offices/ guest house it is likely that performance under many contracts will be delayed, interrupted, or even cancelled the same applies to contracts with consultants and many other fields.

The situation may arise where either you will have to cancel the contract or the contract with you will be cancelled.

The law is getting developed yet as to whether the situations arising due to outbreak of COVID 19 Pandemic can be considered as force majeure. 

Firstly let us explain you what is Force Majeure?

The Law relating to Force Majeure (a French phrase that means a ‘superior force’) is embodied under section 32 and 56 of the Indian Contract Act, 1872. It is as contractual provision agreed upon between parties. The occurrence of a force majeure event protects a party from liability for its failure to perform a contractual obligation. Typically, force majeure events include an Act of God or natural disasters, war or war- like situations, labor unrest or strikes, epidemics, pandemics etc. The intension of force majeure clause is to save the performing party from consequences of something over which it has no control. Force Majeure is an exception to what would otherwise amount to a breach of contract. Whether a contractual obligation can be avoided on the grounds of force majeure is a factual determination based on the specific terms of contract. The Court would examine, whether in each case, impact of COVID-19 pandemic prevented the party from performing its contractual obligation. Indian courts have generally recognized this concept and enforced it where appropriate. The law in India has been l aid down i n the important decision of Supreme Court in the case of Satyabrata Ghose v/s Mugneeram Bangur & Co (AIR 1954 SC 44). The entire jurisprudence by Justice R.F. Nariman of the Supreme Court in a recent decision in the case of Energy Watchdog v/s CERC (2017) 14 SCC 80.

Now there is every possibility that you will come across such issues while carrying out the day to day work after attaining the normalcy.These issues are required to be dealt with, on case to case basis we find it necessary that you should anticipate these with respect to the contracts in hands and keep the organization ready to deal with such contingencies. In case you desire to raise the plea of force majeure it is necessary to issue the notice of force majeure terminating the contract or limiting the scope of contract and such notice is required to be issued now itself.

Two things we know about crises from our experience are:

● They all are different and

● They all end.

How they end for your business depends on the speed and the quality of your crisis management.

Many of our clients have already reached out to us to ask questions, brainstorm an idea, or inquire if we at Manoj Wadekar & Associates has an action plan detailing steps to take during the crisis and we are honored by outreach of our clients and we will be more happy if we can be of any help to your esteemed organization as well.

While the full impact of the COVID-19 outbreak on businesses is not clear at the moment, and the outbreak is likely to spread in coming days, and it is seemingly becoming critical by the week. If you would like to discuss the issues that we have tried to highlight in the letter or on any other legal implication in relation to COVID-19 impact, please feel free to reach out to us.