LETTER | There has been a recent debate on the applicability of the force majuere clause in contracts to absolve further performance of a contract.

Is the Covid-19 pandemic meant to be an event beyond the control of the contracting parties?

For force majuere to be used, it must be an express clause stated in the contract. While stated in the contract, it must also fall in the illustrations e.g war, riots etc. Courts would not imply a force majuere clause into a contract as decided by recent cases.

The force majuere clause only can be utilised as a defence if either party to the contract is unable to perform their obligations due to the occurrence of the event or where the contract becomes frustrated i.e. impossible to be performed.

The movement control order has so far been imposed for a month. For contracts e.g sale & purchase transactions, update to banks, payment of stamp duty, adjudication etc. all can be done online and there should not be any impediments to complete such transactions for there is always a clause for an extension of time (EoT).

For contracts which require physical movement on site e.g construction projects, the Covid 19 event would definitely entitle the project managers to grant an EoT and as such there is no need to terminate the contract as in the situation of war or riots etc.

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