Force Majeure and Hardship in the Corona Crisis: Some Contract Law Reflections on ELI Principle no 13

It is impossible to draw a distinct line between force majeure and change of circumstances, because the two overlap. In order to regulate both force majeure and change of circumstances, the United Nations Convention on Contracts for the International Sale of Goods (CISG) has adopted a unified model in article 79, whereas Chinese law adopts a dual model by treating them as different things and regulating them in different articles. Where the purpose of a contract becomes impossible to achieve because of a force majeure and both the CISG and Chinese Contract Law (the CCL) adopt the same model of termination of the contract, the contract should be terminated by one party with a notice to the other party instead of ipso facto avoidance. In a case of a change of circumstances, in order to terminate the contract, both the CISG and the CCL actually follow the path of raising an action by a notice of avoidance or termination to theother party. Both approaches have their merits and demerits but the differences between them in practice are not as large as presumed. Where force majeure and change of circumstances overlap each other, possible ways for termination of the contract are for a party either to choose their preferred solution or to follow the lex specialis derogat generali. The latter way is preferred in this article; and while in an action for termination the judge may balance the interests of both parties in making a final decision, the uniform application of the law, the safety of the transaction and the fairness of the judgment may be ensured in so doing.

Download Full-text

12. Discharge by frustration: subsequent impossibility

10.1093/he/9780198869993.003.0012 ◽

2021 ◽

pp. 467-492

Author(s):

Robert Merkin ◽

Séverine Saintier ◽

Jill Poole

Keyword(s):

Contract Law ◽

Legal Basis ◽

Breach Of Contract ◽

General Terms ◽

Force Majeure ◽

Common Purpose ◽

Legal Position ◽

The Common ◽

The Law ◽

Legal Consequences

Course-focused and comprehensive, Poole’s Textbook on Contract Law provides an accessible overview of the key areas on the law curriculum. In general terms non-performance constitutes a breach of contract. The contract may have expressly allocated the risk of certain external events which occur after the contract is made to one of the parties by means of a force majeure clause. The terms of this clause will determine the parties’ positions if the event in question occurs. In the absence of an express allocation of the risk, the frustration doctrine is a residual doctrine that governs when such frustrating events intervene, without the fault of either party. These frustrating events relate to impossibility, illegality or frustration of the common purpose of both parties. This chapter examines the legal basis of the frustration doctrine, when it applies, when it does not apply and the legal consequences of frustration on the parties’ positions. Frustration automatically terminates the contract for the future and, where it applies, the provisions of the Law Reform (Frustrated Contracts) Act 1943 govern the parties’ pre-existing legal position.

Download Full-text

Contract Law

10.1093/he/9780198855293.001.0001 ◽

2020 ◽

Author(s):

Ewan McKendrick

Keyword(s):

Bargaining Power ◽

Reading Skills ◽

Contract Law ◽

Undue Influence ◽

Force Majeure ◽

Specific Performance ◽

Consumer Contracts ◽

The Subject ◽

The Law ◽

Unfair Terms

Contract Law: Text, Cases, and Materials provides a complete guide to the subject of contract law. The book comprises a balance of 60% text to 40% cases and materials. Its clear explanations and analyses of the law provide support to students, while the extracts from cases and materials promote the development of essential case reading skills and allow for a more detailed appreciation of the practical workings of the law and of the best legal scholarship. Part I of the book examines the rules relating to the existence of an agreement (particularly offer and acceptance, uncertain and incomplete agreements, and consideration and promissory estoppel). Part II covers the terms of the contract, including implied terms, interpretation, boilerplate clauses, exclusion clauses, unfair terms in consumer contracts, and good faith. Part III examines topics such as mistake, misrepresentation, duress, undue influence, unconscionability, inequality of bargaining power, and frustration and force majeure. Part IV turns to breaches of contract and termination, damages, and specific performance. The last part, Part V, concentrates on third parties.

Download Full-text

Change and termination of the agreement in case of force major circumstances due to the pandemic

Law Review of Kyiv University of Law ◽

10.36695/2219-5521.4.2020.42 ◽

2020 ◽

pp. 238-242

Author(s):

Olga Melnyk

Keyword(s):

Central Committee ◽

Contract Law ◽

Court Decision ◽

Original Form ◽

Interested Party ◽

Foreign Countries ◽

Force Majeure ◽

The World ◽

Significant Change ◽

Legal Consequences

Force majeure can cause a significant change in circumstances, which is the basis for termination or change of the contract, and,ultimately, leads to the termination of the obligation (its termination) or the preservation of the obligation in a modified form. Legalregulation of the legal consequences of a significant change in the circumstances that exist at the conclusion of the contract is usuallybased on one of two key principles of contract law: the principle, according to which contracts must be performed (pacta sunt servanda), or clause (clausula rebus sic stantibus). The legislation of foreign countries contains rules, according to which “a change of circumstancesmay justify a change in the contract, when the preservation of the contract in its original form leads to extraordinary results,incompatible with justice”. The main consequences of a significant change in the circumstances that guided the parties in concludingthe contract are:– actually change the contract, ie change the terms of the contract (and as a consequence – the obligations between the parties)while maintaining the contract in force;– and termination of the contract by agreement of the parties.If the parties do not agree to bring the contract in line with the circumstances that have changed significantly, or to terminate it,the contract may be terminated on the grounds, established by the Central Committee of Ukraine, amended by a court decision at therequest of the interested party: at the conclusion of the contract the parties proceeded from the fact that such a change of circumstanceswill not occur; the change of circumstances is due to reasons, which the interested party could not eliminate after their occurrence withall the care and diligence, required of it.Today, in our country, as in many countries around the world, there is a situation that makes it impossible to fulfill the contractualobligations related to the introduction of national quarantine in connection with the pandemic of coronavirus (COVID-19). The governmentof our state has also resorted to resolving the situation with the introduction of quarantine on the territory of Ukraine.

Download Full-text

The Legality of Doctrine of Frustration in the Realm of Covid-19 Pandemic

Sociological Jurisprudence Journal ◽

10.22225/scj.3.2.1900.84-90 ◽

2020 ◽

Vol 3 (2) ◽

pp. 84-90

Author(s):

Sheela Jayabalan

Keyword(s):

Common Law ◽

Contract Law ◽

The Novel ◽

European Contract ◽

Force Majeure ◽

The Common ◽

Potential Impact ◽

Novel Coronavirus ◽

European Contract Law

The outbreak of the novel coronavirus (“COVID-19-Outbreak”) has a potential impact in the performance of a contract. If a contract does not contain a force majeure clause, a contracting party may look to the common law doctrine of frustration to relieve it from its obligations. Unlike force majeure clauses which focuses on the parties' express intention on how to deal with supervening events, frustration is implied by law and thus would only be considered in the absence of an express force majeure clause. In Malaysia, the doctrine of frustration is codified in section 57(2) of the Contracts Act 1957. A doctrinal analogy of the doctrine of frustration and section 57 of the Contracts Act 1950 indicates a pandemic such as the covid-19 would not frustrate a contract. Force majeure clause should be used as a protective tool to prevent losses to the contracting parties or alternatively the Principles of European Contract Law and the Unidroit Principles that make provisions for hardship as well as force majeure should be implemented.

Download Full-text

12. Discharge by frustration: subsequent impossibility

10.1093/he/9780198869986.003.0012 ◽

2021 ◽

pp. 599-627

Author(s):

Robert Merkin ◽

Séverine Saintier

Keyword(s):

Theoretical Basis ◽

Case Law ◽

Contract Law ◽

Law Reform ◽

Risk Allocation ◽

Force Majeure ◽

The Subject ◽

Contractual Obligations ◽

Contractual Risk ◽

Selection Of

Poole’s Casebook on Contract Law provides a comprehensive selection of case law that addresses all aspects of the subject encountered on undergraduate courses. Without the fault of either party, a contract may be automatically discharged due to frustration that renders further performance of the contract impossible, illegal, or radically different from what was originally conceived. In this case, the parties will be excused further performance of their contractual obligations. However, the frustration doctrine applies only where there is no express provision in the contract (a force majeure clause) allocating the risk. This chapter, which examines the frustration doctrine and discharge for subsequent impossibility, first considers the contractual risk allocation before turning to the theoretical basis for the doctrine of frustration. It then discusses limitations on the operation of the frustration doctrine before examining the effects of frustration and the effects on the parties’ positions of the Law Reform (Frustrated Contracts) Act 1943.

Download Full-text

Penyelesaian Wanprestasi atas Dasar Force Majeure Akibat Pandemi Covid-19 dalam Perjanjian Pembiayaan Konsumen

Jurnal Preferensi Hukum ◽

10.22225/jph.2.2.3334.349-353 ◽

2021 ◽

Vol 2 (2) ◽

pp. 349-353

Author(s):

Made Bagus Rizal Raysando ◽

Ni Komang Arini Setyawati ◽

Desak Gde Dwi Arini

Keyword(s):

Research Method ◽

Contract Law ◽

Consumer Finance ◽

Legal Basis ◽

Conceptual Approach ◽

Contractual Relationship ◽

Corona Virus ◽

Force Majeure ◽

Contractual Obligations

Consumer finance is a financing institution that is officially still relatively new in Indonesia. Consumer financing agreements are agreements that arise in the day-to-day practice of the wider community. In a contractual relationship, the Covid-19 pandemic has become a point of debate between business actors who are bound by the contract. Debtors who have contractual obligations make the Covid-19 pandemic a basis for freeing themselves from their obligations to fulfill achievements. The purpose of this research is to find out the legal basis for the arrangement of consumer financing agreements in the perspective of contract law and to find out the consequences of force majeure for the parties to the consumer financing agreement in the event of a Covid-19 pandemic. The problems contained in this research are how the legal basis for the regulation of consumer financing agreements in the perspective of contract law and what are the consequences of force majeure for parties to the consumer finance agreement in the event of a corona virus outbreak. The method used is a normative research method by using a statutory approach and a conceptual approach. Based on the results of this study, it can be concluded that the Covid-19 pandemic currently occurring can only qualify as a forced condition which is not absolute or relative or it can be said that the debtor cannot make the reason for this pandemic as a reason for contract cancellation. This relative coercion is limited to delaying the implementation of the obligation to fulfill the achievement for a while, whereby the parties can negotiate the agreements that have been previously made.

Download Full-text

21. Frustration and Force Majeure

Contract Law ◽

10.1093/he/9780198855293.003.0021 ◽

2020 ◽

pp. 680-734

Author(s):

Ewan McKendrick

Keyword(s):

Contract Law ◽

European Contract ◽

Narrow Scope ◽

Force Majeure ◽

The Relationship ◽

European Contract Law

The doctrine of frustration operates to discharge a contract where, after the formation of the contract, something occurs which renders performance of the contract impossible, illegal, or something radically different from that which was in the contemplation of the parties at the time of entry into the contract. This chapter examines the scope of the doctrine of frustration and the relationship between the doctrine of frustration and any force majeure or hardship clause that is found in the contract. Consideration is given to the basis of the doctrine of frustration and the remedial consequences of the conclusion that a contract has been frustrated. It also explores the reasons for the narrow scope of the doctrine of frustration and contrasts it with the more liberal regimes to be found in, for example, the Principles of European Contract Law.

Download Full-text