Business Needs A ‘Circuit Breaker' In These Times

Smaller enterprises should be able to claim force majeure against meeting contractual obligations, to save themselves from collapse

- Manu Seshadri

What we need in these troubling times is a law that permits parties to defer their contractual obligations, due to the impact of COVID-19. A ‘circuit breaker’, as it were, to help small and medium-sized businesses navigate a unique period in history when they have been brought to a hard stop. The world is faced with a recession of record dimensions — almost 10 million people have sought unemployment benefits in the US; and an estimated 150 crore workers (who are also consumers) are going to lose their jobs in India. These are mindboggling numbers, which even the most resilient government would be hard-pressed to deal with, and that too in just a matter of three weeks.

Should the government intervene and staunch the flow of blood or should it recognise that employment and economic buoyancy are a function of the market and let them balance themselves out with time? The answer is clear: the bottom has fallen out, and this is that rare moment when the government will have to step in and legislate to protect weaker sections of society and small businesses like lorry owners, cabs, autos, food and beverage businesses, and medium-sized companies from collapse.