Can an agreement be terminated for frustration due to coronavirus (COVID-19)?

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Published on LexisPSL on 16/03/2020

The following Commercial Q&A provides comprehensive and up to date legal information covering:

  • Can an agreement be terminated for frustration due to coronavirus (COVID-19)?
  • What is the doctrine of frustration?
  • Is coronavirus (COVID-19) a frustrating event?
  • Can I terminate my contract?
  • What other contract management options should I consider?

What is the doctrine of frustration?

If the contract does not include a force majeure clause or it does but the applicable force majeure event is not included, it may be possible for the parties to rely on the common law doctrine of frustration. A contract will be discharged by frustration if after formation, an event occurs which renders further performance of the contract impossible, illegal or something different from what was contemplated by the parties when entering into the contract.

Frustration is not a straightforward doctrine to rely on, however, as it is dependent on interpreting the true construction of the terms of a contract in the context of the nature of that contract and the relevant surrounding circumstances when it was made. If there is a radical difference between the original contractual obligation and the performance that is possible due to a change in circumstances, the doctrine of frustration may apply.

Successful reliance on the doctrine of frustration is dependent on the parties having not made provision for a specific set of circumstances in the contract as regards the event that is alleged to have frustrated the contract. Equally, the doctrine of frustration only applies where the supervening event is beyond the control of the parties. It cannot be invoked therefore, by a party keen to escape what they may now consider to be a

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