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Para 9.3.4 - Force Majeure | KartavyaDesk

Goods Manual

Original Rule Text

9.3.6 Force Majeure Clause (FM) 1. A Force Majeure (FM) means extraordinary events or circumstances beyond human control, such as an event described as an act of God (like a natural calamity) or events such as a war, strike, riots, crimes (but not including negligence or wrong-doing, predictable/seasonal rain and any other events specifically excluded in the clause). An FM clause in the contract frees both parties from contractual liability and obligation when prevented by such events from fulfilling their obligations under the contract. An FM clause does not entirely excuse a party's non-performance but only suspends it for the duration of the FM. The firm must give notice of FM within a reasonable time as the conditions permit (say, not later than 14 days after its occurrence), and it cannot be claimed ex-post facto. There may be an FM situation affecting the purchase organisation only. In such a situation, the purchase organisation is to communicate with the supplier along similar lines as above for further necessary action. If the performance in whole or in part or any obligation under this contract is prevented or delayed by any reason of FM for a period exceeding 90 (ninety) days, either party may, at its option, seek to terminate the contract without any financial repercussion on either side.

What This Means

Para 9.3.4 of the Manual for Procurement of Goods, 2017, deals with 'Force Majeure' (FM). Think of Force Majeure as an 'Act of God' clause. It essentially says that if something extraordinary and completely out of anyone's control happens – like a major natural disaster, war, or widespread riots – that prevents either the government agency or the supplier from fulfilling their contract obligations, then neither party is held liable for the failure during that period. This doesn't mean the contract is automatically cancelled, just that performance is suspended.

However, there are important conditions. The party affected by the Force Majeure event needs to notify the other party within a reasonable timeframe (ideally within 14 days). You can't claim Force Majeure after the fact. Also, if the Force Majeure event continues to prevent performance for more than 90 days, either the government agency or the supplier can choose to end the contract without facing any financial penalties. This clause protects both the government and the supplier from unforeseen and uncontrollable events that disrupt the procurement process.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Key Points

  • •Force Majeure (FM) covers extraordinary events beyond human control like natural disasters or war.
  • •FM suspends contractual obligations, it doesn't automatically terminate the contract.
  • •The affected party must notify the other party of the FM event within a reasonable time (e.g., 14 days).
  • •If the FM event lasts longer than 90 days, either party can terminate the contract without financial penalty.
  • •Negligence, wrongdoing, predictable events (like seasonal rain), and specifically excluded events are NOT covered under FM.

Practical Example

The Ministry of Textiles contracted with 'Silk Weavers Ltd.' to supply 10,000 silk sarees by December 31, 2024, for a government gifting program. In November 2024, a massive earthquake struck the region where Silk Weavers Ltd.'s factory was located, causing significant damage and halting production. Silk Weavers Ltd. immediately notified the Ministry of Textiles about the earthquake and its impact on their ability to fulfill the contract.

Since the earthquake qualifies as a Force Majeure event, Silk Weavers Ltd. is not held liable for failing to deliver the sarees on time. If the factory remains inoperable for more than 90 days due to the earthquake, either the Ministry of Textiles or Silk Weavers Ltd. can choose to terminate the contract without any financial repercussions. If the factory resumes operation within 90 days, the Ministry and Silk Weavers Ltd. can renegotiate the delivery schedule.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Frequently Asked Questions

What exactly qualifies as a 'reasonable time' for notifying about a Force Majeure event?▼
While the rule suggests 'not later than 14 days,' the specific timeframe can depend on the circumstances. The key is to notify the other party as soon as practically possible after the event occurs and its impact is understood.
If a supplier claims Force Majeure, does the government agency have to accept it?▼
No. The government agency should investigate the claim to verify its validity. The agency needs to assess if the event genuinely qualifies as Force Majeure and if it directly prevented the supplier from fulfilling their obligations.
What happens if only a portion of the contract is affected by the Force Majeure event?▼
The Force Majeure clause applies only to the portion of the contract that is directly affected. The supplier is still obligated to fulfill the remaining unaffected parts of the contract.
Can a supplier claim Force Majeure due to economic hardship or financial difficulties?▼
No. Economic hardship or financial difficulties generally do not qualify as Force Majeure events. The event must be extraordinary and beyond the supplier's control.
If the government terminates the contract due to Force Majeure, is the supplier entitled to any compensation for work already completed?▼
The rule states termination without 'financial repercussion on either side'. This generally means no penalties for non-performance. However, the contract should specify how to handle payments for goods or services already provided before the Force Majeure event occurred. Typically, the supplier would be compensated for the work completed up to that point, subject to verification and agreement.

This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.

Test Your Knowledge

Question 1 of 3

According to Para 9.3.4 of the Manual for Procurement of Goods, 2017, which of the following events would NOT typically be considered a Force Majeure event?

Related Rules

Para 9.4Manual for Procurement of Goods, 2024 - Para 9.4 - Chapter 9Para 9.5.5Manual for Procurement of Goods, 2024 - Para 9.5.5 - Chapter 9Para 1.8.2Manual for Procurement of Goods, 2024 - Para 1.8.2 - Chapter 1Para 2.2.2Manual for Procurement of Goods, 2024 - Para 2.2.2 - Chapter 2Para 2.2Manual for Procurement of Goods, 2024 - Para 2.2 - Chapter 2

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