All relevant factors, including the broader contract and factual circumstances, will be considered by the court when assessing whether a frustrating event has occurred. However, there are some principles that you should be aware of. The length of the delay in relation to the contract as a whole is likely to be a relevant factor. For example, if a party to a three-year shared office space contract has not had access to the premises for two months, this may be considered insignificant and would not lead to frustration. However, if the contract was valid for six months and the occupation was banned by the government for five months, it is possible that this frustrated the contract. If a contract contains a force majeure clause, it is unlikely that the parties will be able to express their frustration. The parties are considered to have already expressly regulated the consequences of a particular ancillary event in the contract itself.18 On the other hand, frustration sets a higher threshold for compensation and its consequences are automatic. Accordingly, defaulting parties should carefully review their contracts for the applicable force majeure provisions before considering frustration, which is often considered a last resort. The parties should also consider the consequences of the allegation that a contract has been thwarted, in particular if the contract is a long-term contract on terms that are advantageous to the party invoking frustration, or if the other party is a particularly important business partner. Remember: frustration ends a contract.
It does not suspend it. The court rejected the tenants` contention that there was a notion of «temporary frustration» in English law. A contract is either frustrated in its entirety or not. The effect of frustration is to terminate the contract so that it cannot be temporarily frustrated and then revived at a later date. Whether you are a supplier or a customer, review your existing supply contracts, check the effects of force majeure clauses and whether these clauses can and should be activated in the current circumstances. Its first use in the case of Taylor vs Caldwell II dates back to 1863. In the case, it was an opera house rented/contracted for concert use. The place experienced a devastating fire.
Exactly what the contract depended on, the opera, no longer existed, so the court concluded that the contract was frustrated. Originally, the concept that defined the principle of frustration in contract law was the idea that the contract exception could only be used as an excuse if the change in circumstances at the beginning of the contract was not reasonably foreseeable, so that a provision or contingency could be foreseen for the occurrence of such a circumstance. A party may also be able to withhold an amount of the money paid to cover expenses incurred. In addition, the court may require a party to pay a fair amount for a valuable benefit received under the contract. The contracting parties must check whether their contract contains a major clause. Force majeure clauses differ from one contract to another and a clause should not be formulated in such a way as to be applicable in the current circumstances. In times of the COVID-19 pandemic, parties attempting to excuse contract performance under the doctrine of objective frustration must ensure that they demonstrate through their pleadings that COVID-19: It is important to decide whether a contract is frustrated that the event may not have been induced in any way by either party.  For example, an allegation of frustration in Ocean Tramp Tankers Corporation v. V/O Sovfracht was dismissed when a charterer of a ship let it cross the Suez Canal and then became trapped (after the canal was closed during the war).
When a frustrating event is predictably induced, a claim of frustration may be denied.  Maritime National Fish Ltd v. Ocean Trawlers Ltd is an example of this principle. Maritime National Fish commissioned Ocean Trawlers Ltd. to lease a steam trawler with an otter trawl. Both parties knew that the use of such a vessel without a permit was illegal. Subsequently, Maritime National Fish applied for five permits from the Canadian government, but only three were granted. Maritime National Fish did not name the vessel leased by Ocean Trawlers as one of the licensed vessels and refused to lease because the contract was frustrated. Their appeal was dismissed on the grounds that they themselves had run the risk of being denied certain licences and that the fact that they had not granted a licence to their chartered steam trawler had caused frustration.
 However, frustration with the treaty is not acceptable in all circumstances or in all types of contracts. It is acceptable if the law deems it unfair to force a party to comply with the terms of the contract due to events beyond its control or beyond its control. Therefore, the contract is considered frustrated for all intents and purposes. A delay in the execution of the contract due to Covid-19 will be temporary and hopefully relatively short-term. Temporary impossibility or delay is not in itself a cause for frustration. However, it can thwart a contract in two circumstances: frustration is an English doctrine of contract law that serves as a means of terminating contracts when an unforeseen event renders contractual obligations impossible or radically alters the party`s primary purpose for entering into a contract. Historically, there was no way to set aside an impossible treaty after its creation; It was not until 1863 and in Taylor v. Caldwell, that the beginnings of the doctrine of frustration have been established. Although education has expanded from the beginning, it is still closely applied;  Lord Roskill stated that «it should not be imputed lightly in order to free the contracting parties from the normal consequences of negligence».
 Is the treaty frustrated? Yes – the action of the state has made it now impossible for the concert to take place and therefore to fulfill its obligations to one of the parties. If a contract does not contain a force majeure clause, a party may examine the frustration doctrine to see if the contract was terminated out of frustration. In order to prove that a contract has been thwarted, it is usually necessary to prove that performance of contractual obligations is indeed impossible. It is not enough that commitments have become extremely difficult, even if they would lead to devastating difficulties for a party. If a type of service remains an option, it must be claimed regardless of the burden it would impose on the party. Frustration puts an end to the treaty. The effect is automatic and does not depend on any action by one of the parties. Therefore, it is not recommended that the parties try to invoke the doctrine lightly, especially at the beginning of a long-term contract. In many cases, it will make more economic sense for the parties to negotiate another way to resolve the problem – for example, in the Canary Wharf case, the EMA agreed to a sublease agreement. The consequences of a party actually invoking force majeure depend on the wording of the clause.
The clause may authorize a party to suspend or extend the period of performance or to allow the termination of the contract. It is common for a force majeure clause to allow for the suspension of obligations for a certain period of time, after which one or both parties have the option of terminating the contract. This has become a controversial issue in contract law when it comes to the fact that the approach of a clause is implied only when it is necessary or reasonable. In addition, there is still confusion as to whether the term was implied by facts or laws. Contract frustration is often referred to as goal frustration. This article provides an in-depth analysis of the key legal principles of force majeure and frustration and how they can be applied to contracts affected by covid-19. The table below provides hypothetical scenarios related to COVID-19 that show when frustration can and cannot occur. Please note that these are hypothetical situations only with a basic analysis. This can lead to problems with supply contracts when a company has encountered financial difficulties before the COVID-19 outbreak. Reporting force majeure in oil purchase contracts can be particularly challenging, as careful consideration is required to determine whether a party is unable to meet its obligations due to the impact of COVID-19 or lower oil prices. Is the contract frustrated? No – it is unlikely that a two-week period will be considered an unreasonably long period.
In addition, the construction company may be able to source delivery elsewhere, and the fact that this may make the performance of the obligation more expensive or more expensive does not mean that the contract is frustrated. Force majeure and, if necessary, frustration both relieve parties who can no longer fulfill their contractual obligations through no fault of their own. However, these are concepts that are applied restrictively by the English courts. Frustration of purpose: This is another common law doctrine that may excuse enforcement, but only in certain circumstances. It applies if a change in circumstances after the conclusion of a contract renders the performance of one party worthless to the other and defeats its purpose at the time of conclusion of the contract. To excuse non-performance, the frustrated objective must be so fundamental and essential to the contract that the parties would never have completed their transaction without it. The objective intent of the parties, as stated in the wording of the contract itself, is usually the key to determining whether the frustration serves the essential purpose of the contract. .