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IP Contract Issues in times of COVID 19
Frustration or No Frustration – Read ON
Uncertain times leads to wisdom. That’s true but what about the past & present. That’s the issue leading businesses in the world are facing and more severely in reference to their contracts & promises. The underlying question in everyone’s mind is whether promises made by the parties to an IP contract shall be legally binding in these times.
In India, this issue has its heart in place in sections 32 and 56 of the Indian Contract Act where the spirit of force majeure and the doctrine of frustration have been well outlined. These two sections govern the occurrence of events & acts respectively related to Contracts. There are several factors which come in to play like impracticability, performance issues, doctrine of frustration, force majeure which have been dealt with in cases such as Satyabrata Ghose v. Mugneeram Bangur as well as Energy Watchdog vs. CERC to name a few.
The views of experts stand divided on contracts during COVID 19. It all depends on the wordings of the clauses used. Whether the word pandemic has been used for frustration or whether COVID will qualify as Act of God in Force Majeure. The parties will have to demonstrate that acts have become impossible, however it will be dealt with on case to case basis.