Contract Frustration

 

 

 

Zoe Davis | Trainee Solicitor

What do I do if I can’t carry out my obligations under a contract due to Covid-19?

Have you entered into a Contract which you and your business are struggling to stick to?

Do you have obligations or time schedules which you can no longer meet because of Covid-19?

Is your business going to lose out because you were unable to fulfil your contract obligations?

We might be able to help you.

In English Contract Law, if you are unable to fulfil your obligations under a contact due to some unforeseen circumstances, you may have a defence in frustration.

What is frustration? 

A contract is frustrated when unforeseen circumstances outside your control, such as the Covid-19 pandemic, mean that the contract obligations are impossible to fulfil.

For example, if you entered into a contract to build a house by a certain date, and you can no longer do so as 25% of your workers are self-isolating, the contract would be seen as frustrated.

What does this mean for my contract? 

This can mean that the contract can be set aside, and neither party need fulfil their obligations under it.

If you do not wish for this to happen, you can contact the other contractual parties and enter into negotiations regarding which contract obligations need to change in order for you to complete the contract, i.e such as extending the date for the houses to be built.

You can use frustration as a Defence if you are taken to Court for breach of contract, as you have been unable to fulfil your contract obligations due to unforeseen circumstances. In this scenario you will need to provide evidence.

What should I do if I think a contract is frustrated? 

If you have any issues with complying with your contract obligations, you should try to negotiate amicably with the other contract parties.  The Court’s do not look well on proceedings being issued without an attempt to amicably settle matters first, especially in this pandemic.

Where you have long standing relationships with the other contract parties, you don’t want to end up in Court and ruin a perfectly good business relationship.

If you don’t think you will be able to complete your contract obligations within the time required ask for an extension.

If negotiating yourself doesn’t work or you have been served with proceedings or require some specialist advice, contact the Dispute Resolution Team at Josiah Hincks Solicitors.