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Force Majeure Clause In Lease Agreement

ii. Any result of the normal and natural consequences of external forces. The decision does not answer many questions. How will the courts formulate broader force majeure provisions that do not specifically refer to government actions? Similarly, the decision does not specify what happens when the impact of a home residence order is less clear. Furthermore, it is not clear how a court could make a provision for a force majeure case during the COVID 19 pandemic, outside the context of an executive order stay at home. Is the pandemic enough to trigger a change in force majeure? Finally, since States are beginning to allow the reopening of businesses, but with restrictions such as capacity restrictions, what are the consequences on a force majeure provision? Similarly, Hitz Restaurant Corp.`s argument leaves this question unanswered and remains to be considered in the future. Section 56 states that “agreement on an act that is itself impossible is undyed.” Contact with an act that subsequently becomes impossible or illegal because of an event that the promisor could not prevent becomes invalid if the act itself becomes impossible or illegal. Recently, an Illinois court found that the Illinois governor`s executive was for the first time a case of force majeure in the context of the COVID 19 pandemic. As a result, the tenant was excused from paying part of his tenancy commitment after the governor asked the businesses to close in mid-March 2020. Despite the increase in force in the tenant`s tenancy agreement, which explicitly stated that the lack of money was not a discharge basis, the court found that the executive order to close the business constituted an “act of government” expressly stated in the force majeure clause.

Economic hardship or inconvenience cannot be an excuse for a tenant to avoid paying rent. If, in this case too, there is an alternative remedy to overcome the effects of force majeure, in this case too, the tenant is required to pay the rent. The force majeure clause cannot therefore be invoked unless the tenant has exhausted other options for the performance of the contract. A fundamental link must be established between the event of force majeure and the non-compliance with the contractual obligation. The party concerned must be able to clearly demonstrate that the force majeure event was the cause of the breach of the contractual obligation. Similarly, in Raja Dhruv Dev Chand vs. Raja Harmohinder Singh (1968) 3 SCR 339 observed that, in general, Indian courts have held that Section 56 of Contract Act 1872 is not applicable where the rights and obligations of the parties are under a transfer of ownership. It was decided that the doctrine of frustration would not apply to a tenancy agreement if the transfer of ownership by the lease under Indian law, due to the transfer of the right to enjoy the country as well.