Aero Toy Store LLC vs

Tandrin Aviation Holdings

Ltd
CASE STUDY
SUBMITTED BY : Intekhab Aslam
Q1.
On what basis did the court refuse to enforce the force majeure clause to
excuse ATS failure to perform?

 Force Majeure is applied to any Company only in events of occurrence of Act of

God viz. flood, tempest, riot, Government instability, etc.
 It does not include economic meltdown.
 In reference to the English case of Total Valley Power Ltd vs Total Gas & Power
Ltd (2006), force majeure was applied because the court found that it was
commercially impossible for the defendant.
 As per clause 7.17 there is no inclusion of economic downturn as a part of force
majeure.
 ATS failed to prove that its case falls under the category of “Sellers beyond
reasonable control”.
Q2. Should economic or market circumstances ever serve as a basis for failure to perform
contractual duties? Why or why not? Under what circumstances should such circumstances
excuse performance?

 As per clause 7.17 economic or market downturn fails to qualify to be

quantified as force majeure.
Hence, it cannot be a basis of failure of performance.
In case when the project becomes commercially impossible to be
performed.
Any unforeseen situation beyond seller’s control.
For example- aircraft to be delivered within a stipulated time but with
sudden demise of the seller’s pilot.
Q3.
If you were ATS attorney, how would you have drafted the force majeure clause to
excuse performance in the event your client could not obtain financing?

As ATS attorney, I would have referred to the case of Total Valley Power Ltd vs
Total Gas & Power Ltd and sought an excuse citing that it is commercially
impossible to acknowledge the order.
If Force majeure is continued for a specific period of time (in days), both the
parties should have given in writing to the other parties of such continuance or
dissolution of such contract.
 If my client is unavailable to go ahead with the contract I would have given it in
writing as well as mentioned in the financial in availability as clause of Termination
clause 15.1 and 15.2 and also in Waiver clause 16.2 (reference to Indian Law)
resulting in partial forfeit of advance payment of $3 million and the percentage not to
exceed 60%.
Thank You