In the famous Energy Watchdog v CERC case at the Supreme Court, Adani Power tried unsuccessfully to terminate a force majeure contract. In 2017, the company had won an offer to supply the Haryana government. At the time, the company expected that the current energy charges and to be paid by the government would not degenerate. A few years later, an increase in the price of Indonesian crude coal led Adani Power to challenge the Supreme Court to terminate the contract on the basis of a force majeure case. Coal prices in Indonesia were not revised 40 years before the supply was submitted, they argued. The Tribunal found, however, that the bidder should be aware of the risk of increasing or variable cost of raw materials when submitting the offer and therefore rejected cases of force majeure. As this case shows, a case of force majeure did not occur simply because an agreement is no longer financially viable. The definition of the contract is given by the S.2 (h) of the Indian Contract Act, which provides that “a contract is a legally enforceable agreement.” Therefore, a contract is an agreement between two or more parties that will enforce the law. An agreement is defined as “any promise and set of promises that make for each other.
If a proposal is adopted, it becomes a promise. Therefore, an agreement is a proposal adopted. To reach an agreement, there must therefore be a proposal or offer from one party and its acceptance by another party. In short, proposal for an agreement – adoption. The second part of the definition relates to the applicability of the law. An agreement is enforceable u/s 10 if it is concluded by competent parties, their free consent and legitimate rebuttal and consideration. Therefore, a contract – agreement – enforceable. Therefore, all contracts are agreements, but not all agreements are necessarily contracts. An agreement consists of promises between the two parties. For the drafting of the contract, an agreement must have the following elements- A contract is a contract that is legally applicable. The agreement still exists between two or more parties, but no less than two parties. An act of force majeure or an “act of God” is a contractual clause that refers to an unsealed event such as earthquakes, fire, war or any other situation that prevents the parties from pursuing or applying their contractual provisions.
This clause reduces the burden on the parties of penalties or debt in the event of force majeure. These contractual obligations may include the occupancy of premises, the provision of goods, the payment of services and other acts for which the contract was registered. The force majeure event must make it impossible to execute the contract and must not only financially penalize the performance of the contract. MEANING AND DEFINITION OF CONTRACT UNDER THE INDIAN CONTRACT ACT 1872- It remains to be seen whether the courts and insurance companies will accept claims of force majeure. It also remains to be seen whether governments will give businesses and business buildings an exemption from paying taxes because of the current freeze.