Ministry of Finance clarifies that the Force Majeure Clause can be invoked for the disruption of supply chains on account of coronavirus
This is a quick update to let you know that the Ministry of Finance, through an Office Memorandum dated 19th February, 2020, has clarified that the disruption of supply chains due to the spread of coronavirus in any country, will be considered as a natural calamity and will therefore be covered in the Force Majeure Clause (“FMC”) as defined in paragraph 9.7.7. under the Manual for Procurement of Goods, 2017 (“Manual”).
- Accordingly, in order to invoke FMC, the firm has to give immediate notice upon occurrence of Force Majeure and the same cannot be claimed ex-post facto;
- In the event the Force Majeure situation affects the purchase organisation only, then the purchase organisation needs to communicate the same with the supplier for further necessary action;
- In case the performance of the contract (in whole or in part) or any obligation under the contract is prevented or delayed by any reason of Force Majeure, for a period exceeding 90 days, either party may terminate the contract without financial repercussion.
Source: Ministry of Finance