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Examples of rare or unique themes can be the sale of a stake in a plot of land (since no two plots are the same) or a single antique vase. In both scenarios, damages may not be an appropriate remedy because there is no market replacement and, therefore, the innocent party would not be able to achieve equivalent performance (regardless of the price). However, an increase in financial difficulties or losses in the performance of the contract does not lead to frustration.15 Certain types of contracts, such as charter contracts and contracts for the sale and carriage of goods, may be more likely to be frustrated when a particular event occurs that clearly makes performance impossible. Assuming that there is one or more cases of force majeure, the contractor must prove that he is or will be “prevented” from fulfilling “one” of his obligations (and inform the employer within 14 days of becoming aware of the problem). The English courts try to apply the principle sometimes called “inviolability of the contract”[22] and that contracts must be respected. This generally requires the parties to fulfill their obligations or pay their financial equivalent in damages. Only in the most exceptional circumstances will exceptions to this rule be made. The question of whether a party should be released from a contractual obligation involves a thorough examination of the facts, with the law providing relatively little guidance. This gives the courts a great deal of leeway to achieve a fair result. Each case revolves around its own unique contractual terms and evidence of the course of the parties` business.

English law reflects its internationalism and takes this possibility into account. Whether a relevant contractor may terminate the contract due to illegality depends on whether the service is illegal in the place where it was to be provided. If this is the case, the contract may be frustrated. Otherwise, an argument of frustration based on illegality will fail. In a recent example of how this doctrine works in practice, it was found that the lease of an EU agency in London is not frustrated by Brexit, although the agency claims that its organisational statutes require its headquarters in an EU member state. Basically, the obligation could be fulfilled under the laws of the place where the building was located. [43] The service in question must not be illegal. This is particularly important for the restrictions imposed by the government regarding COVID-19 and how and when these restrictions can be eased in the future. On the other hand, force majeure clauses can provide a thoughtful and economically realistic solution to the problem of obstructing performance. They also generally set a lower threshold for the availability of facilitations. As for their effects, depending on their conditions, they tend to be more predictable and to obtain a more proportional and differentiated distribution of losses in relation to the overall event, which is in the interest of both parties.

Parties should therefore generally pay attention to their force majeure clauses before considering invoking the doctrine of frustration. Suppose a company has a contract that requires it to provide ancillary services at a large trade show that is now cancelled due to the coronavirus outbreak. The provider can still provide the services (so not impossible), but the purpose of the transaction was that thousands of attendees would attend the event. In this case, the frustration of the goal, and not the impossibility of performance, is a better argument. Parties should also be aware of potential breaches by their counterparties and should be prepared to consider whether such breaches would negate their own performance. As a general rule, and in the absence of contradictory contractual provisions, only material breaches allow for reverse non-performance. [25] A violation is significant if it goes “to the root of the agreement between the parties.” [26] The materiality of an offence is a factual investigation that weighs several factors, including “the extent to which the injured party is deprived of the benefit it could reasonably have expected.” [27] In some situations, damages cannot be considered an appropriate remedy by the innocent party and may consider seeking a court order to force the defaulting party to deliver what it agreed at the time the contract was entered into. The courts have the power to order the performance of specific contractual obligations, but this is a difficult process. If the performance of a contract is only partially unlawful, English law may allow the disputed clause to be separated from the rest of the contract so that the rest of a contract is enforceable. The types of events organized to thwart a treaty include war, incapacity or death, cancellation of an event, change of law, destruction of the article, or unusual delay.

On the other hand, the doctrine of frustration of purpose may be less applicable in the current circumstances. Frustration of purpose fulfills a party`s obligations under a contract when an unforeseen event has occurred that, in connection with the entire transaction, destroys the underlying reasons for the performance of the contract, even if performance is possible. The frustration of the objective excuses performance when a “virtually catastrophic and completely unpredictable event renders the contract worthless to a party”; it is not enough that the transaction has become less profitable for the affected party or even that the party suffers a loss. [23] Since the frustration of the objective must be so great and the frustrating event must be one that cannot be foreseen or foreseen by contractual guarantees, the doctrine is rarely considered applicable in practice. Parties assessing their contractual obligations in the light of operational disruptions caused by the COVID-19 pandemic should also consider whether their contracts contain conditions precedent that have not been met, whether non-compliance with those conditions precedent temporarily or permanently excuses compliance with and/or whether compliance with certain conditions precedent can or should be cancelled. In the absence of an agreement, litigation on such issues can be complicated, lengthy and fraught with collateral considerations stemming from the severity of the impact of the virus. Other conditions that may be addressed in this force majeure clause and that are relevant to any analysis and (or related clauses of the contract, such as limitation of liability, termination, default and lump sum damages) may include time limits after which a party may terminate, required notices from the affected party indicating the cause and expected effects of the delay or non-performance. and specific allowances and remedies beyond termination. Unfortunately, some treaties are silent on these specific issues. In practice, construction contracts are usually particularly irreconcilable for parties who want to claim frustration.

The reason for this is that most construction contracts contain force majeure clauses. The side effect of such clauses is to exclude arguments that an event falling within the scope of the clause thwarted the contract. In the eyes of an English court, parties accepting a force majeure clause have considered, almost by definition, the circumstances in which overlapping events should give them the right to cease performance. As such, it can be presumed that they have established a code of contract that covers the same reason as the common law doctrine, or at least that strongly interferes with it. If they have (indeed) “pulled out” frustration in this way, the courts will not hesitate to allow them to do so. Faced with the choice to implement the intentions (although presumed) of the parties and seize the brutal instrument of frustration, they will opt for the former. Freedom of contract trumps the policies that underpin the doctrine of frustration. With the development of the coronavirus crisis, the doctrine of frustration is likely to play a particularly important role in the performance of contracts whose performance has become illegal. Jurisprudence on such situations is highly developed, in part because of the frequency with which war measures (such as. B embargoes on trade with Europe[34] and national restrictions and requirements[35]) affected the execution of treaties under English law in the 20th century.

Especially given the introduction of far-reaching government restrictions in the wake of the pandemic, it can be said that some contracts are being thwarted on the grounds that the service would no longer be legal. On March 11, 2020, the World Health Organization officially declared the coronavirus outbreak (“COVID-19”) to be a global pandemic. [1] In addition to the human cost, COVID-19 continues to cause widespread disruptions to business operations around the world, including stay-at-home orders issued in most states, including, in many cases, the closure of office staffing functions by all non-essential businesses across the state, and the U.S. federal government has imposed restrictions on non-essential travel across the borders of Canada and Mexico. .