To help Members clarify their contractual obligations as they prepare their return to trading,
Lydia Ward of BAR Affiliate Backhouse Jones Solicitors addresses some technical points
and frequently asked questions concerning the operation of force majeure and frustration in
relation to commercial contracts that are impacted by the coronavirus (Covid-19) pandemic.
What is a force majeure clause?
A force majeure clause in a contract deals specifically
with how parties’ obligations may be affected by an
event – usually one that is unforeseen and outside
the control or influence of either party – that affects a
party’s ability to perform the contract.
Force majeure clauses are all different, although
they are commonplace in commercial contracts. They
usually list certain defined circumstances that might
prevent the performance of contractual obligations,
such as ‘acts of god’ (e.g., earthquakes) and certain acts
of man of a disruptive and unforeseeable nature (e.g.,
industrial action). The clause will usually also prescribe
what the parties must do next – for instance, to notify
the other party and possibly take certain reasonable
steps to mitigate the effect of the event that is impacting
performance. In England and Wales, force majeure is
not implied as a matter of law, and express clauses are
interpreted strictly. If there isn’t a clause in the contract,
you won’t be able to rely on it.
What is frustration?
The common law principle of frustration allows a
party to be discharged from its contractual obligations
where a change in circumstances makes it physically or
commercially impossible to perform the contract. The
circumstances in which frustration can be applied
How do these affect my commercial
It is important to note that, under English law, contracts
that require ongoing performance are, in principle,
absolute. There is therefore no automatic right of
release if a party is experiencing Covid-19-related
business disruption. The party is required to perform
its obligations and will be potentially liable to its
counterparty for a failure to do so.
The two key exceptions to this rule are:
• the operation of any force majeure clauses in a
• the common law principle of frustration.
However, each individual commercial contract will
need to be examined to see what is and is not possible
22 Removals & Storage June 2020
under the agreement in order to establish whether
either of these exceptions apply, and what practical steps
must be taken to benefit from their reliefs.
Force majeure: key factors to
Key factors that operators need to consider include:
• Is Covid-19 specifically covered as a force majeure
event? Some force majeure clauses contain
references to epidemics or pandemics, which would
be likely to include Covid-19.
• If there is no specific reference to an epidemic
or pandemic, is there any wording relating to
governmental decisions or administrative action
that would cover the action taken in relation to
• Has causation been established? The party seeking
to rely on force majeure must establish that the
force majeure event has prevented or hindered it
from performance of the contract.
• Has the party seeking to rely on force majeure taken
reasonable steps to mitigate or avoid the effects of
the force majeure event?
• Have parties fulfilled any notice requirements set
out in the force majeure clause?
• What are the consequences of establishing force
majeure? Some clauses allow one or both parties
to terminate the contract, so ensure that early
discussions are instigated with the counterparty
to establish ongoing aims/objectives for the
contractual relationship and consider all
Frustration: relief available
If there is no force majeure clause in a contract, a
party may still be able to claim frustration to enable
it to be discharged from its contractual obligations if
the change in circumstances makes it physically or
commercially impossible to perform the contract, or
would render performance radically different.
The courts have confirmed that the circumstances in
which frustration can be invoked are narrow. However,
it is likely that frustration may be accepted where, for
example, performance of a contract is rendered
“Under English law,
contracts that require
are, in principle,
absolute. There is
therefore no automatic
right of release if a party
is experiencing Covid-
disruption. The party is
required to perform its
obligations and will be
potentially liable to its
counterparty for a failure
to do so.”
impossible as a result of a state-imposed lockdown.
If frustration applies, the contract is automatically
terminated, and the Law Reform (Frustrated Contracts)
Act 1943 allows recovery of monies paid under the
contract before it was discharged. This is subject to
an allowance, at the court’s discretion, for expenses
incurred by the other party.
• Check the specific terms of your force majeure
clause, or terms of business as a whole, before
serving any notice in respect of Covid-19 business
• Always consider the long-term effects of invoking
• Consider reviewing your commercial contracts to
see what amendments may be required, either now
or in the future, to cover contract performance
difficulties because of Covid-19.
Backhouse Jones can provide a full review of relevant
key clauses and suggest amendments tailored to your
business and commercial situation for a fixed fee.
Backhouse Jones Solicitors is a Member of the BAR’s
Panel of Professional Advisors. For more information,
visit www.backhousejones.co.uk or call 01254 828300