By S&S Co. Advocates & Solicitors · Published 25 February 2026 · Informational content, not legal advice: see our disclaimer
Two Distinct Legal Routes
An Indian business seeking to excuse non-performance of a contract due to an unforeseen supervening event has two distinct legal routes available: a contractual force majeure clause, if one exists in the agreement, or the statutory doctrine of frustration under Section 56 of the Indian Contract Act, 1872, which applies whether or not the contract contains an express clause.
Force Majeure Clauses Are Construed Strictly
Where a contract contains a force majeure clause, its scope is determined entirely by its own wording. Courts construe such clauses strictly and will not extend them beyond the events they actually list or the general language they actually use. A well-drafted clause typically lists specific triggering events (such as war, natural disaster, government prohibition or epidemic) and includes notice, mitigation and, often, a long-stop termination right if the event continues beyond a specified period.
A party invoking force majeure carries the burden of showing that the clause's conditions are genuinely met: that the event falls within its scope, that it actually prevented performance (not merely made performance more expensive or less convenient), and that the invoking party complied with any notice requirements the clause imposes.
Frustration Under Section 56: A Narrower, Statutory Doctrine
Where a contract has no force majeure clause, or where an event falls outside its scope, a party may instead argue that the contract has been frustrated under Section 56, which renders an agreement void where the act contracted for becomes impossible, or unlawful, by reason of an event the promisor could not prevent, occurring after the contract was made.
Indian courts have consistently held frustration to be a narrow doctrine, not a general escape route from a bad bargain. Mere hardship, commercial difficulty, or a rise in cost does not frustrate a contract. The event must genuinely destroy the basis on which the parties contracted, such as by making performance physically or legally impossible, or by making the entire commercial purpose of the contract impossible to achieve.
Practical Drafting Lessons
Given how narrowly both routes are construed, the most reliable protection is a carefully negotiated force majeure clause that expressly addresses the categories of risk relevant to the specific transaction, including whether price volatility, supply chain disruption or regulatory change are meant to be covered, rather than relying on generic boilerplate language or hoping Section 56 will step in.
Frequently Asked Questions
Does a force majeure clause automatically cover a pandemic or lockdown?
Only if its language is broad enough to capture such events, or expressly lists them. Courts read force majeure clauses strictly according to their actual wording, not by general reference to what seems fair.
Can rising costs or reduced profitability trigger force majeure or frustration?
Generally no. Both routes require that performance become impossible or unlawful, not merely more expensive or less profitable for one party.
What happens to a contract once frustration under Section 56 is established?
The contract becomes void from the point of the frustrating event, and any party who has received an advantage under the contract before that point must restore it or compensate the other party, under Section 65 of the Contract Act.
Should every commercial contract include a force majeure clause?
Yes: relying solely on the narrow statutory doctrine of frustration is riskier than negotiating a clear force majeure clause tailored to the specific risks of the transaction.
References & Further Reading
This article references the following statutory provisions. Readers should always verify current rules, fees and timelines against the applicable statute and rules as amended, since these are revised from time to time.
- The Indian Contract Act, 1872, Section 56 (Agreement to do impossible act) and Section 65 (Obligation of person who has received advantage under void agreement).
- General principles of contractual interpretation applicable to force majeure clauses as construed by Indian courts.