User:Dhruvtantia/sandbox

Scenario:

An entrepreneur was a sole owner of a publicly-traded company, XYZ company. Due to an epidemic, XYZ company failed to pay its supplier according to the contract. The epidemic is highly contagious and lethal. The supplier levied a delay fee, in accordance to the contract, to XYZ company.

Answer:

ISSUE: Is XYZ company liable to pay the delay fee to the supplier?

RULE: Generally, in the law of contracts, an act of God may be interpreted as an implied defense under the rule of impossibility or impracticability. In case of an act of God occurrence, the promise is discharged because of unforeseen occurrences, which are unavoidable and will result in insurmountable delay, expense, or other material breach.

ANALYSIS: Act of God can be described as a providential occurrence or extraordinary manifestation of the forces of nature which could not have been foreseen and the effect thereof avoided by the exercise of reasonable prudence, diligence and care, or by the use of those means which the situation renders reasonable to employ.

CONCLUSION: The epidemic can be classified as an act of God because it is an unforeseeable event and the non-payment cannot be avoided because of the epidemic situation. Hence, XYZ company is not liable to pay the levied delay fee.

Neutral Voiced Summary:

An issue in the law of contracts is whether the terms of contracts be complied upon in the case of an epidemic.

As a general principle of Act of God ^[1], epidemic can be classified as an act of God if the epidemic was unforeseeable and renders the promise discharged if the promisor cannot avoid the effect of the epidemic by exercise of reasonable prudence, diligence and care, or by the use of those means which the situation renders reasonable to employ ^[2].

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