Case Study: Legal Importance & Sanctity of a Force Majeure Clause in an Agreement/Contract | Corporate Law Attorney in Delhi NCR | Corporate Lawyer in Delhi NCR |
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The professional team of Advocates & Lawyers of My Lawyers Advice are taking up an initiative solely to educate and enlighten the public at large with respect to the various aspects of different laws and/or legislations vis a vis their legal implications and importance while duly considering the legal procedures involved. The professional Advocates & Lawyers are sharing their experiences solely for the purpose of spreading legal education. The name of the actual entity and/or person is hidden and shall be hereinafter mentioned and referred to as “Querist”.
A Querist, who is an Importer of electronics and mobile accessories and has it’s base in Mumbai (India). The Querist regularly imports mobile accessories including earphones, power banks, mobile covers, mobile tampered glasses etc from China and then sells them in India. The Querist had ordered goods worth Rupees One Crore from China in the early January 2020. The Indian importer paid the advance payment towards the import of the goods to his Chinese counterpart. However, due to the outbreak of Coronavirus (COVID-19) although the order was placed for the goods and the part payment was made by the Indian importer yet the goods cannot be shipped due to lockdown situation in China. The outbreak of Coronavirus (COVID-19) has led to the closure of manufacturing units and factories, many workers are infected, many areas are quarantines, there are restrictions placed upon shipping lines and cross border movement of goods and other allied unprecedented conditions and restrictions. The entire crisis has led to shortage of supplies and increase in the demand and thus the demand and supply curve has shifted which eventually leads to increase in price or incremental pricing.
The Querist in the present case approached us in the middle of January 2020 and an Addendum to the pre-existing Agreement/Contract was added with the “Force Majeure Clause “ and the “Pricing Clause” with the specific mention about the outbreak of Coronavirus (COVID-19) and the conditions, incapacities and the restrictions mentioned herein above. The said Addendum mentioned that once normalcy is attained the Chinese Exporter shall send the shipment on priority basis to India and there shall be no impact on the pricing which was agreed earlier irrespective of the escalation of costs and expenses towards the manufacture and production (if any). The said Addendum was added to the Agreement/Contract and was executed and signed by both the Importer & the Exporter.
Thus, the “Force Majeure Clause” has clearly helped both the Importer & the Exporter in saving their personal and professional relationships while also providing support and well-being to their respective businesses even in such turmoil and fluid situation.
We hope that the case study would envisage the legal importance and sanctity of the Force Majeure clause in an Agreement/Contract to our readers and increase their knowledge about the basics of business laws and/or corporate laws.
Authored By: Adv. Anant Sharma