Force Majeure In Rent Agreements

To answer the first question, it is important to understand the applicability of “force majeure” or “frustration rule” clauses in leases and to answer the second question. The fact that Section 56 of the ICA does not apply to leases is governed by legislation. Leases are governed by Section 108 (e) of the Property Transfer Act, 1882, (TPA), which is a specific legislation on the transfer of ownership by mortgage, lease, sale, etc., and which prevails over a general clause/law (section 56 ICA). In accordance with Section 108 (e) of the TPA, the property is, if the property is substantially or totally destroyed by irresistible force or if it is rendered essential and permanently unfit for the purposes for which it was leased, so that the lease is cancelled at the deeder`s choice. Therefore, the deed itself may be cancelled by the tenant if the property cannot be used as shown above. In this case, the tenant must communicate to the landlord and return the property to the owner. However, Indian law does not provide for a suspension of the right to rent for a fixed period of time because of “force majeure”. The fundamental principles of the applicability of “force majeure” clauses are the same: as we all want to adapt to this new environment, most landlords and tenants will be willing to be flexible rather than involved in costly litigation. However, anyone wishing to avail themselves of the force majeure provisions in their agreement is encouraged to seek legal advice as soon as possible. Given the unprecedented disruptions caused by the coronavirus pandemic, many donors and developers will face significant delays in the implementation of their construction obligations under leases and other development contracts. Whether they are entitled to an easing of these commitments as a result of the current pandemic will depend to a large extent on the specific conditions of the agreement. Most leases contain a type of provision, often referred to as a force majeure clause, that the parties` contractual obligations are relaxed or modified in some way as a result of certain events occurring beyond their control. While some contracts list certain events such as bad weather, strikes, government measures, etc., or report a case of force majeure, it is more usual for a lease agreement to require the lessor to make reasonable efforts to achieve a practical completion at a given time, but to allow delays that are permitted by the construction contract or that are fair and reasonable when completion is delayed due to an event or cause outside the proper control of the lessor.

Given the unexplored waters in which we find ourselves, it may be reasonable to assume that such a clause will assist any homeowner who is currently unable to meet his construction obligations due to government gridlock, health and safety requirements, or a lack of manpower and equipment resulting from the coronavirus outbreak. However, the current crisis should not be seen as a freedom of exit for parties wishing to evade their contractual obligations, and there are a number of practical considerations that must be taken into account if you want to invoke a force majeure clause: unless the force majeure clause is expressly provided, even the inability to “use” the premises does not only meet its requirements.