This information relates only to implications for English law contracts.
Where there is no force majeure clause or where its scope is too narrow, Covid-19 may operate to frustrate the agreement.
What is frustration?
Frustration is a common law concept applied by the English court to all English law contracts.
What are the requirements for frustration?
The party declaring frustration to excuse their performance must show that:
- the event is unforeseen and outside the parties’ control, and
- the event has made performance impossible or radically different
What are the consequences of declaring frustration?
The effect of a frustrating event occurring is that the agreement is automatically terminated.
Does Covid-19 qualify as a frustrating event?
It is conceivable that the Covid-19 outbreak could frustrate certain types of arrangement, particularly since the imposition of the lockdown.
It would be necessary to consider the terms of the agreement, the nature of the parties’ obligations and the consequences of automatic termination before determining whether a contract may have been frustrated.
Webinar recording: Force majeure – litigation in the wake of Covid-19
In this webinar, Sean Upson, Mo Bhaskaran and Lucy Ward used their experience relating to force majeure clauses following the California energy crisis, the Japan earthquake and tsunami in 2011 and in the wake of 9/11 terrorist attacks, to cover: What is force majeure and frustration?; Considerations when applying force majeure to the current UK situation; What events would a force majeure clause cover?; The requirements to consider when a force majeure clause is used; and The burden of proof when invoking force majeure.
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