In addition to upending lives, the COVID-19 epidemic destroyed innumerable contracts all around the world. As lockdowns closed sites, event planners saw deposits disappear. Fuel contracts gathered dust as airlines parked their fleets. In the midst of broken supply chains, suppliers had to meet unattainable delivery dates. Courts in India and elsewhere struggled with a basic issue: may contracts just terminate in the event of a global disaster, or does the law still require performance?
Let me introduce the doctrine of frustration, a legal safety net that has long been eclipsed by force majeure provisions. A contract is deemed void under Section 56 of India’s Contract Act, 1872, if performance is rendered impracticable without the fault of any party. However, the pandemic made it necessary to make a decision: did COVID-19 cause “frustration,” or did it only make transactions more difficult? This conflict used judicial mercy with contractual protections to rethink force majeure.
What Is Frustration, anyway?
Imagine that you reserve a music hall for your ideal performance, but the structure is destroyed by fire overnight. Impossibility—no insurance windfall, no backups. In Taylor v. Caldwell (1863), English common law created frustration by declaring the contract void due to the venue’s destruction, which rendered fulfilment objectively impossible.
It was neatly codified in India: “An agreement to execute an impossible act is void.” Death of a major performer, illegality due to new regulations, or drastic changes that make the transaction “fundamentally different” are important triggers. Self-inflicted difficulty is not taken into account by the courts, who can detect justifications masquerading as fate.
In contrast, the contract itself has provisions for force majeure. Consider invoking “act of God, war, or pestilence” as an excuse for delays. Businesses depended on these listings prior to the pandemic. However, many clauses either hid or completely ignored pandemics. Frustration became the catch-all for the unlisted apocalypse when COVID struck.
Pandemic Contracts Under Fire
The number of instances increased dramatically in India. Tenants fought landlords over rent; exporters fought importers; hoteliers sued event organizers. Consider Energy Watchdog v. CERC (2017), a pre-COVID precedent in which the Supreme Court held that parties must anticipate commercial risks and rejected complaints about coal shortages. However, SARS-CoV-2? That was not the same.
The Delhi High Court considered a rig contract that was put on hold due to shut down in Halliburton Offshore Services v. Vedanta (2020). “Epidemics” were covered by force majeure, but frustration also applied: instructions from the government prevented work. Courts started interpreting provisions broadly, viewing COVID as the ultimate unanticipated event.
Dockets were overflowing with rent disputes. Landlords claimed that since malls continued to exist and tenants continued to breathe, their dissatisfaction went beyond simple financial loss. However, judges supported lessees in Standard Retail vs GS Global Corp. (Bombay HC), where complete shutdowns changed the purpose of the lease from commerce to emptiness. “Radically different,” they said, nullifying commitments.
What We Learned (The Real Talk)
You see, the epidemic served as a warning. Those ambiguous “act of God” clauses? When courts actually read them, they were dead on arrival. These days, astute attorneys are jamming “pandemic clauses”—such as notice periods, mitigation obligations, and the like—into contracts.
When your clause is bad, frustration remains as a backup plan. In actuality, contracts are only agreements between parties who are unable to forecast the future, thus they were never unbreakable in the first place. COVID shown that courts understand that.
Climate catastrophes, AI interfering with employment—who knows? Will your insurance be nullified by floods? “Show me” says the Bombay High Court. Companies in Delhi malls and Mumbai mills have finally received the message: either cover your bases or let the judge make the final decision.
