Another foreign decision of interest in this context is alliance concrete Singapore Pte Ltd v. Sato Kogyo (S) Pte Ltd. In this case, Indonesia had banned the export of sand to Singapore. The court ultimately concluded that the legal prohibition was a frustrating event, as it fundamentally altered the obligations imposed on the parties.10 As a result, the parties were released from their contractual obligations when the prohibition came into force. It will be interesting to see if Australian courts take a similar approach if the COVID-19 crisis results in bans on the import or export of certain goods. At least one case has addressed this issue in the context of COVID-19 and has come to the conclusion, which I believe is the right conclusion. UMNV`s recent decision against Caffé Nero in Massachusetts involved a Boston coffee shop that claimed that a pandemic-related government order banning the consumption of food or beverages locally thwarted the purpose of its lease (UMNV 205-207 Newbury, LLC v Caffé Nero Ams Inc., No. 2084CV01493-BLS2, 2021 WL 956069, at *1 (Mass Super Feb 8, 2021)). The café attempted to be exempted from paying its rent while the order was in effect, and the court issued a summary judgment in its favour for reasons of frustration (Id). This is not an exhaustive list, but gives an overview of the type of circumstances that can represent frustration.
Frustration is a doctrine of English contract law that serves as a means of terminating contracts when an unforeseen event makes 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[1], that the beginnings of the doctrine of frustration have been established. Although education has expanded from the beginning[2], it is still closely applied; [3] Lord Roskill stated that ”it should not be imputed lightly in order to free the contracting parties from the normal consequences of negligence”. [4] If an object essential to the contract or a building expressly mentioned is destroyed through no fault of one of the parties, it may be deferred as being incapable of performance, as stated in Taylor v. Caldwell. However, these principles differ when it comes to the sale of goods. Agreement between the parties is important when it comes to checking whether he has become frustrated. [18] Where it is agreed that the goods will be supplied from a specific source, the contract falls under section 7 of the Sale of Goods Act 1979:[19] A frustrated contract terminates the obligations after the frustrating event. [38] Under previous common law rules, this resulted in potentially unfair outcomes.B, that is, if one party paid an advance to the other party, it could not be recovered. [39] It has been generally accepted that such a rule violates the principles of fairness.
[40] Chandler v. Webster[41] shows a classic conclusion that the recovery of an advance payment for the rental of a contract apartment (which was later considered impossible) was non-refundable. The influence of Scottish law and, behind it, (Roman) civil law is evident in the subsequent judgments of the House of Lords in Cantiere San Rocco v Clyde Shipbuilding and Engineering Co. 1924 AC 226 indicates that English law was an exception in the legal systems developed to refuse restoration in a situation such as Chandler. The position was considered in English law only in Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd[42], in which the House of Lords ruled that payments made in exchange for no consideration should not be recoverable: Snapshot of circumstances that may constitute frustration In the context of the COVID-19 crisis, the following circumstances may be considered sufficient to frustrate a contract in certain cases (for example): International perspective In cases where a party`s performance is only temporarily hampered by COVID-19 restrictions, it is unlikely that a court will conclude that a frustrating event has occurred and should lead to the performance of the parties` contractual obligations. Since the COVID-19 pandemic hit the world in early 2020, businesses and organizations have faced a number of serious challenges in fulfilling their contractual obligations. Many were forced to investigate whether they could postpone or avoid these obligations without violating their contracts. In a previous article, we looked at how force majeure clauses and the doctrine of frustration can help contracting parties. In short, the doctrine of frustration will only apply in rare cases.
The parties should not use it as an automatic remedy in the event of an unprecedented event or even a global pandemic. While the courts have recognized the possibility of a lease or contract being thwarted, they have repeatedly said that the threshold for proving frustration remains high. This is an important warning for parties entering into contracts of all kinds. Early cases, such as Paradine v. Jane[5], show the historical line that the courts have taken in this sense of frustration with the object of the contract; In this case, the courts concluded that if land leased to the defendant had been searched by royalist forces, he was still required to pay rent to the landowner. [6] This is only in Taylor v. Caldwell that a doctrine of frustration was officially recognized that mitigated the potential harshness of previous decisions. [7] In this case, two parties entered into an agreement to lease a music hall for the performance of concerts […].
