In the face of the current health crisis the primary issue is the health and welfare of citizens but both the health crisis itself and governmental actions implemented to halt it are already having an impact on businesses’ ability to carry out their obligations under commercial contracts.
This blog examines how that impact may affect obligations under contracts and in particular how ‘force majeure’ clauses and the principle of ‘frustration’ might affect contractual obligations.
Force majeure and frustration
Force majeure and frustration address the circumstances in which contractual performance may be modified or ‘discharged’ (i.e., no longer required) as a result of supervening events which detrimentally impact the parties’ ability to perform. Force majeure is a generic term for a common type of contractual clause – while frustration is a general doctrine which applies where the parties have not made provision to cover the event in question.
As a first step when confronted with a detrimental impact on the ability to perform the contract, consider whether the contract contains a force majeure clause and what it says; if it covers the case, frustration will have no role to play.
Read full article here.