How to Deal With Construction Delays Due to ‘Act of God’
Jun 26, 2019 Real Estate News
Opting for the under-construction houses is a good idea. From comparatively lower price and the happiness of moving into a newly constructed home is unmatched. A lot of times, the buyers are left to wait endlessly to get the possession of their house. The construction delay due to ‘Act of God’ is something that no one has control on. Even if the buyers take the builder to court for the delay, in this case, the builder can win the case fair and square.
Force Majeure is often mentioned in the agreement clause, but the buyers overlook that at the time of signing the agreement. We discuss everything that you must know about the clause.
What is the Force Majeure clause?
The French term ‘Force Majeure’ translates to an inevitable accident or ‘Act of God’ in English. It states the events that cannot be controlled or predicted by human force. The Indian Constitution has recognised it under the Indian Contract Act, 1872, and it gives the responsible party more time to finish their task for things that are beyond their control.
All the agreements have the Force Majeure clause, and it is incorporated in the agreements to protect the builder in case of an uncertain event. However, the developers use this clause to justify the delay in the completion they put some vague incidents in the report and get the benefit from the clause.
The NCDRC has rejected many project cases which cited Force Majeure as the reason or delay in the completion of the project. Recently, the MahaRERA ruled that the builders cannot use the Force Majeure clause to justify the shortage of funds and lack of approvals. Home Buyers can challenge these incidents in the court as ‘wilful delays’.
Terms that need to be justified to prove the Force Majeure clause:
1. Externality:
The clause must not have been brought by the defaulting parties and should cater to the act that is beyond their means and control.
2. Unpredictability:
The nature of the cause should be unforeseeable and unpredictable.
3. Irresistibility:
It states that under no circumstances, the cause could have controlled or resisted. The defaulting parties have to prove that they exercised the caution in their part.
How the clause functions:
1. Qualifications:
For the clause to be regarded in the court, it has to fall under specific qualification. Flood, drought, earthquake or any other natural calamity falls under the category. War and government decree is under the clause. Causes like labour strike, shortage of funds water supply issue, litigation etc. cannot be used to justify under Force Majeure.
2. Scope:
The clause does not entirely relieve the party from completing its contractual obligation but only suspends it for the time being. The contract between the parties can also mention the duration for which the force majeure can be claimed.
3. Right checks:
To make sure that the developer is not making the excuses for the delay under the clause, the buyer must ensure certain conditions that are inserted in the contract. It should list all the possible scenarios that can cause the delay of the project that is beyond the control of the builder. Also, the clause must be explicitly spelt out in the agreement if the builder wants to take advantage of it.
Force Majeure is often mentioned in the agreement clause, but the buyers overlook that at the time of signing the agreement. We discuss everything that you must know about the clause.
What is the Force Majeure clause?
The French term ‘Force Majeure’ translates to an inevitable accident or ‘Act of God’ in English. It states the events that cannot be controlled or predicted by human force. The Indian Constitution has recognised it under the Indian Contract Act, 1872, and it gives the responsible party more time to finish their task for things that are beyond their control.
All the agreements have the Force Majeure clause, and it is incorporated in the agreements to protect the builder in case of an uncertain event. However, the developers use this clause to justify the delay in the completion they put some vague incidents in the report and get the benefit from the clause.
The NCDRC has rejected many project cases which cited Force Majeure as the reason or delay in the completion of the project. Recently, the MahaRERA ruled that the builders cannot use the Force Majeure clause to justify the shortage of funds and lack of approvals. Home Buyers can challenge these incidents in the court as ‘wilful delays’.
Terms that need to be justified to prove the Force Majeure clause:
1. Externality:
The clause must not have been brought by the defaulting parties and should cater to the act that is beyond their means and control.
2. Unpredictability:
The nature of the cause should be unforeseeable and unpredictable.
3. Irresistibility:
It states that under no circumstances, the cause could have controlled or resisted. The defaulting parties have to prove that they exercised the caution in their part.
How the clause functions:
1. Qualifications:
For the clause to be regarded in the court, it has to fall under specific qualification. Flood, drought, earthquake or any other natural calamity falls under the category. War and government decree is under the clause. Causes like labour strike, shortage of funds water supply issue, litigation etc. cannot be used to justify under Force Majeure.
2. Scope:
The clause does not entirely relieve the party from completing its contractual obligation but only suspends it for the time being. The contract between the parties can also mention the duration for which the force majeure can be claimed.
3. Right checks:
To make sure that the developer is not making the excuses for the delay under the clause, the buyer must ensure certain conditions that are inserted in the contract. It should list all the possible scenarios that can cause the delay of the project that is beyond the control of the builder. Also, the clause must be explicitly spelt out in the agreement if the builder wants to take advantage of it.
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