The French term ”force majeure” refers to force majeure. The performance of a part of the contract is not possible for reasons beyond the control of the parties and which could not be avoided by the application of due diligence, this provision protects the parties. It covers a broader category of events than vis-à-vis major (i.e. force majeure). One of the most affected sectors is the real estate sector, especially under the Holiday and Licensing Agreement (LLA) for residential and commercial real estate. Many licensees are either people who work in office and work jobs (who are affected to the extent that they are asked to accept a full pay cut or no salary, or who are on leave or laid off or placed in the bank) or start-ups/businesses that suffer losses (due to legal restrictions imposed by the Government of India or the Government of India. the State, as the case may be). This, in turn, significantly affected the ability to pay rent/license fee/compensation, etc. in such a situation. Many people or businesses who have completed an LLA now have difficulty paying rent, license fees, and compensation. In this article, we will talk about the effects of force majeure clauses in a vacation and license agreement. Alternatively, tenants/licensees may consider negotiating and amending their existing contracts, i.e. rental agreements or holiday and licence agreements with the lessor(s) or licensor(s).
Due to the notification requesting the closure of all facilities by 14.04.2020 or until another date that may be communicated later, licensees who operate their facilities from authorized premises will lose revenue, while the obligation to pay royalties will continue to burden them. However, in light of the recent decision of the Delhi Supreme Court[9], in which the court took a liberal approach to the tenant and granted a relaxation of the rent payment, taking into account that the tenant intends to occupy the premises, a parallel analysis can be established and the tenant(s)/licensee(s) could consider terminating the lease/lease deed and the license agreement. with immediate effect and the departure from the leased or authorized premises, regardless of whether a notice of termination must be sent to the landlord(s)/licensor(s) for a certain period. Such termination could help the tenant(s)/licensee(s) to release themselves from their obligation to pay future rent or royalties. However, the tenant(s) would continue to be required to pay rent or royalties prior to termination for the period during which they occupied the leased or authorized premises. This article is situated in the above context, in which the author will attempt to put an end to the confusions / doubts regarding the right of tenants to request the waiver / suspension of the payment of rents, in the absence or existence of a force majeure clause in the context of rental / commercial license agreements, as the case may be, during the period of confinement as well as after the confinement. First, with regard to the provisions of Article 62(d) of the IEA, which provides that a licence is deemed to have been revoked if the property is destroyed or altered by force majeure so permanently that the licensee can no longer exercise his right. It is important to note here that the current situation related to the pandemic is of a temporary nature and that licensees have limited the use of the premises only for a certain period of time and therefore cannot be considered a permanent destruction or modification. As such, it may be difficult for the licensee relying on section 62(d) of the IEA to prove that the current pandemic, which is temporary, has resulted in the destruction or permanent alteration of the premises. Force majeure mainly refers to unforeseen events due to which there is a non-performance of a contract that results in either the suspension or termination of the contract. One may wonder if the plague of COVID-19 is a biological event or an act of God? Is it difficult to say, since an event like this has not taken place for many years and the law on such unexplored events has not yet been developed? There is no specific definition or legal provision to categorize the same thing.
Many countries have had to change their understanding of existing force majeure laws to apply them to the pandemic. Take, for example, the United States, where courts generally interpret cases of force majeure as major natural disasters, based on the precedent set by the Supreme Court in Gleeson v. Virginia Midland Railway. However, after the pandemic, they had to fight this precedent to place COVID in the force majeure field. Therefore, the courts accepted COVID-19 as force majeure and relied on force majeure, but the claim also depended on many other cases, such as. B.dem what is included in the contract, negotiations, dispute resolution, limitations of liability, indemnification, etc. ”If by fire, storm or flood or the violence of an army or a crowd or other irresistible force, a material part of the property is completely destroyed or substantial and permanent for the Purposes for which it was rented is rendered unusable, the rental agreement is invalid at the choice of the tenant: provided that if the violation was caused by the illegal act or omission of the tenant, he is not allowed to make use of this provision” In general, most commercial holiday and license agreements contain a force majeure clause. This clause essentially means that if, in unforeseen circumstances, an event occurs that renders the party to the holiday and licence agreement unable to perform its part of the contract, this constitutes a sufficient excuse for non-performance of the contract. Cases of force majeure include, but are not limited to, the following: – Licensees may also face the challenge of invoking section 56 of the Indian Contracts Act, i.e. the doctrine of frustration, as the current impossibility caused by the lockdown or pandemic is not permanent and does not frustrate the entire contract or exempt the obligations of the parties, but only granted an extension of the deadline for the execution of the agreement.
However, the parties may attempt to prove the frustration of the contract under section 56 of the Act by claiming that the lock-in prevents them from using the licensed premises to operate their business, for which purpose the licence was obtained. Since the premises cannot be used for the purposes for which the contract was concluded, it can be argued that the contract is frustrated. Therefore, in particular, a licensee may request the termination of the contract on the basis of the `doctrine of frustration`, unless the licensee continues to store its goods on the premises or resides on the premises and during that period the licensor is not free to use or use the premises as it sees fit. Now, it has been established that many of these tenants/licensees are requesting suspension/waiver of rent/royalty on the basis of force majeure clauses included in their respective commercial leases or licenses, and in the absence of such a clause based on the frustration of the contract, leading to litigation. .