Covid-19 cancellation and suspension of contracts
The World has changed.
Worrying about Brexit and freedom of movement seems like a distant memory. The pubs were closed in Dublin on St. Patrick’s day. There is no live sport anywhere in the world. Theaters, bars and restaurants are empty.
New expressions have arrived in the English language; “Self- isolate” is now said more often than “selfie”.
“Force majeure” may also become a significant part of our vocabulary in the coming weeks and months.
Force majeure is the happening of events outside the control of the parties to a contract. For example, this could be natural disasters, the outbreak of hostilities, and, of particular relevance today, epidemics and pandemics. It is usual for parties to provide in a contract that such events will not make the defaulting party liable if they prevent it from performing its obligations. The concept is derived from civil law but is not fully recognised under common law, which means the wording of any force majeure clause is particularly important.
Normally a breach by a party of its obligations under a contract for non-performance or delayed performance would result in that party being liable to pay the other party the losses that they suffer as a result of the breach. However, if this was caused by an event outside their control and where that circumstance is addressed by a force majeure clause in the contract (which usually includes a list of events) then the party relying on the clause may be able to avoid liability that might have arisen from the breach. In the absence of an express clause, the common law doctrine of frustration may apply. Frustration only applies in certain restricted circumstances where performance has become impossible. It offers limited relief and remedies to the parties.
If you have any queries about force majeure please contact Graham Young (email: email@example.com, phone: 01483 796002 or 07967333328).
Cheyney Goulding LLP is a firm of solicitors in Guildford, Surrey.
This guide is for general information only and does not constitute legal advice.