ECONOMIC CRISIS DUE TO COVID-19 – AN ACT OF GOD ?

We all are aware that how the 2020 turned to be the worst year ever. Covid-19, a minute virus shook the world with its perilous actions. It was doubted by some of the people that whether this Covid-19 to be considered under Act of God or not ? Through this article I would like to give you all an brief view of Act of God and discuss about the question that “ Whether Covid-19 is an Act of God or not ?”

INTRODUCTION

Covid-19 is a virus that born in the capital city of China, Wuhan city. It is a hazardous disease which spreads through the physical contact. In the beginning era of this Covid-19 none are aware of the symptoms and effects of this dangerous disease. Later when the number of people effected increased all the doctors and scientists across the world started researching about this virus, but till todays there is no vaccine found for this 2020 monster.
The symptoms of this disease are common symptoms like cold, cough, fever, etc. But the effect of this disease was dangerous. It took nearly lakhs of people lives. The world was shocked by the results of this thesaurus virus, and announced lockdowns as it is spreading through physical contact. Different nations restricted travelings facilities, shopping malls, and even work places are shut down. This led to an outbreak in domestic market and its network in supply of chain. The economy of every country was effected. Due to social distancing and other preventive methods followed a negative impact has effected the domestic market chain.
Disruptions in supply-chain, unintentional and delay in performances and carrying out of the contractual tasks have been the immediate results of the negative impact on the economy. From construction contracts to manufacturing and supply agreements, the variety of contracts which are likely to be affected by the spread of Covid-19 is undoubtedly enormous. Many services were delayed due to the prevention methods taken cause of Covid-19. So there are worried whether they will be sued for the breach of contract. And so there are trying to prove that this virus and the delayed happened due to it is an Act of God.

READ  Types of Defamation

WHAT IS ACT OF GOD ?

An Act of God is used as an “General Defence”. Act of God serves as an good defence under law of torts. This defence is a kind of unforeseeable accident occurred due to natural forces like heavy rains, storms, heavy winds, etc. There should be an exclusion of both human agency and foreseeability, only then this defence will be applicable. To apply the defence Act of God there should be an exclusive consequences of natural causes, and an event or accident which was never happened before by nature or never expectable.
Sickness, which spreads from one person to another can be given a thought as an exclusion of natural causes. So, there may be chances of arguments that Covid-19 doesn’t fit under Act of God. But there is an English case “ Boast v Firth (1868) where the court declared the illness as an act of god. While making the judgement of the case the judge mentioned that only those illness that aren’t the fault of the person can be considered as Act of God. But not every illness can be considered as Act of God. If a painter or writer or any employee are unable to perform their given task due to their illness or sickness like paralysis or insane while performing their task, they cannot be held liable.

ARE THE ECONOMIC CRISIS DUE TO COVID-19 ARE UNDER ACT OF GOD ?

Due to the lockdowns that resulted in break down of many services and contracts, a large number of companies and enterprises were are not able to complete the contracts they made. For example the hotels, entertainment, retail, construction and hospitality sectors left their contracts and services incomplete due to the lockdown enforced by the government as a prevention method of Covid-19. Subsequently, they were made to break the promises made for the employment, supply of goods and services, and so the effected people are trying to make them liable for breaking their promises.
Many are considering Covid-19 as an force majeure. But Covid-19 is not force majeure by itself. Force majeure is a clause used n an agreement or contract where the parties are allowed to not complete are fulfil their promises under extraordinary conditions where the promises are made impossible to fulfil. Whereas I the clause Act of God the promises are not fulfilled due to natural disasters or actions. There are two conditions under force majeure. They are, the event must be under the control of parties or must be unforeseeable by the parties.
This clause is used to get protection under unavoidable and uncontrollable situations. Nowadays we see many corporates are facing this issue and are trying to seek protection under this clause. Mostly the insurance companies and the real estate companies are trying to protect through force majeure. But if the IRDAI instructs insurers to claim their settlement, then there will be no chance for the insurers to utilise force majeure.

READ  MURDER OR CULPABLE HOMICIDE?

INTERPRETATION OF FORCE MAJEURE TO COVID CRISIS

Many prevention methods like social distancing, complete lockdown, etc are taken by the government worldwide. In such a scenario, it is impossible to prevent that parties across the world would seek to relieve themselves of the contractual obligations they would have otherwise performed, by making a plea of the doctrine of force majeure.
But it is not sure that whether the court will approve the clause force majeure. Even though it would be safe if the parties plead force majeure in courts. It would be safe for the organisations if they are able to prove that the breach of contract or the delay in completing the promises is made was not cause of lack of commercial viability or inefficiency but because of the other factors like the measures taken to prevent the spread of Covid-19 and the actions taken by the government like lockdown, social distancing, etc.

CONCLUSION

COVID-19 and the prevention method taken caused a lot of downfall in the economic standards of many countries across the world. Many pretend that covid-19 to be considered as an Act of God. And so the services delayed and the contracts incompleted due to the lockdown are to be excuses under the defence called “Act of God”. But there are some people who say that this scenario can be sheltered under Force majeure, so the crisis occurred due to the lockdown are force majeure but not the Covid-19. However it would better if the courts and regulators encourage litigants to go for negotiations to settle their disputes.

READ  Public Interest Litigation

Author: Duvvuru Sravya Reddy,
Ifim Law School, 1st year, BBA LLB student

Leave a Comment