If a contract is frustrated, the contract will immediately be terminated and both parties released from performance. The effect of frustration is far reaching. It is not in dispute that the Covid 19 is beyond the control of parties contracting and its continued presence can constitute a ground for frustration. The party mush show that he / she was prevented from carrying out the obligations under the contract by circumstances beyond his contemplation and control”. Where the court is satisfied that such an event has occurred, the contract / agreement comes to an end. The doctrine of frustration however recognizes that changes in circumstances (which are totally beyond the control of both parties) may relieve a party from a contractual obligation(s) where insistence on performance would result in impracticable or intolerable results incompatible with justice. Where a party to a contract or agreement fails to keep his promise, he is said to have committed a “breach” of the contract and the innocent party can sue. The law states that a parties must keep their promise(s) and not avoid obligations in a contract / agreement without the consent of the each other. In simple terms where a known music artistea was booked for a performance on March 22 nd 2020 should he still be expected to fulfill his obligations despite the ravaging pandemic? The drafting of the clause should be clear and specify in detail such events that could amount to a force majeure and parties should have the option to take steps to remedy the default or mitigate losses.įrustration occurs where a party to a contract indicates that the contract cannot be performed for overwhelming reasons beyond control. In determining the effect of Covid 19 on contracts / business arrangements, the major consideration would be whether or not the contract in question contains termination clauses and more importantly, “Force Majeure” clause and – in the worst case scenarios – frustration clauses. When a contract is executed, it is expected that each parties fulfill their obligations as agreed. The implication of contract terms during COVID 19: Having concluded that we are in the middle of a global emergency, the pertinent concern is what becomes of existing obligations that were halted and what happens after the situation has been controlled and normalcy is restored? For example, you are probably reading this article from your home.įrom construction contracts to holiday bookings and tickets to performance events, the range of contracts likely to be affected by the spread of COVID-19 will most be enormous. The IMF recently downgraded its global growth projections for the year by almost half as a result of the Pandemic, various businesses and interactions are being placed on a hold, boarders are being closed and gatherings are being restricted. The media has consistently reports the daily catastrophe caused by the Virus. There is no doubt that the Covid19 pandemic has affected various facets of life. We are quite certain that many business owners may feel distressed and worried, adding to their worries are contractual obligations they are unable to perform due to the pandemic. STAYING AFLOAT: HOW TO PROTECT YOURBUSINESS DURING AND POST COVID-19
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