How does force majeure apply to real estate, insurance?

The force majeure clause is a common term found in contracts but has become more relevant today due to the impact of the covid-19 crisis on businesses across sectors. The clause, typically, states that in events where a company’s performance or obligations are hindered due to a natural or state-imposed calamity, strike, and legislation or restriction by the government or statutory authority or any other circumstances that are beyond the company’s anticipation, then the contract shall be suspended either partially or fully.

Real estate contracts, too, according to the Rera Act, have a provision for force majeure. If the clause triggers, developers can demand an extension of registration or in the completion deadline of their projects without paying any compensation for the delay. However, only extensions up to a year can be granted.

The clause is present in insurance contracts too. But the Life Insurance Council clarified recently that the clause will not apply in case of death claims due to covid-19. It is not valid for both state-run and private life insurers. Typically, under the clause, life insurers can cease to operate in unforeseen circumstances.