June 2020 Removals & Storage 23
Frequently asked questions: Covid-19
Below are some of the most common questions
we receive from operators concerning force
majeure and frustration.
We are a removals company. Can
we rely on a force majeure clause if
we are unable to perform our
services because of Covid-19?
Removals services are covered under the
Consumer Rights Act 2015, and terms governing
when services must be performed will generally
form part of the contract. The Consumer Rights
Act provides remedies for breach of these terms,
and therefore a removals company may be able
to limit – but cannot exclude – its liability for
such a breach. Any contract terms that attempt
to prevent or discourage a customer from
exercising their statutory rights are also void.
However, it is likely that a provision that seeks
to limit the company’s liability for delays caused
by circumstances outside its control would be
acceptable under the Consumer Rights Act.
The Competition and Markets Authority
(CMA)’s Unfair Terms Guidance states that
clauses excluding liability for delay are more
likely to be regarded as fair, and thus to be
• they are restricted in scope to delays
unavoidably caused by factors beyond the
• the company takes reasonable steps to
prevent or minimise delay;
• if there is a risk of substantial delay, the
customer is given a penalty-free right to
Generally, good communication with the
customer throughout the move process should
minimise upset when the circumstances are
clearly beyond the removals company’s control
as a result of Covid-19.
Is it force majeure if our supplier is
still able to deliver, but we don’t
require their services as a result of
Normally, force majeure clauses do not
automatically excuse both parties from all
liability or bring the contract automatically to
an end. Typically, a customer’s main obligation
is to pay the contract price for the service (or
goods) that the supplier provides. They are also
subject to an implied term that they will not
actively prevent the supplier from carrying out its
obligation. You must therefore consider:
• Does Covid-19 prevent you from paying for
• Does Covid-19 prevent you from doing
something that must be done before the
supplier can provide the service? For example,
if the Government has required you to close
your premises, which the supplier needs
access to in order to provide the service.
• Even if the supplier is still physically able to
deliver the service or goods, is it legal for them
to do so, considering the lockdown restrictions?
The specific wording of the force majeure
clause, and the particular circumstances relating
to the performance of the contract, will need
to be examined to determine whether you may
claim any reliefs under force majeure.
If there is no force majeure clause,
will I be in breach of contract if I am
no longer able to perform under it?
Again, this will depend on the terms of the
particular contract. If the obligation to perform
is absolute, then a failure to perform according
to its terms can be a breach, even if the party is
not morally to blame.
Fault is not a requirement for breach, unless
the contract says it is. If the failure to perform
is a breach, it will normally give the other party
the right to claim damages, and possibly also the
right to terminate.
In the absence of a force majeure clause, a party
looking to defend themselves against a claim for
breach of contract may want to explore whether
frustration is applicable to the particular contract.
The force majeure clause in my
contract requires a certain amount
of notice in order to rely on it. Should
I serve it on my counterparty ‘just
This depends on what the effect of the notice is,
as well as the risk and/or benefit of giving it. Once
you serve the notice, you cannot un-serve it.
For example, if you serve notice on your
supplier ‘just in case,’ this might allow the
supplier to end the contract on the grounds that
they found it unprofitable, or for other reasons
that are unconnected with the force majeure
event. It may then prove impossible, because of
the extent of the Covid-19 pandemic, to bring
in an alternative supplier. Great consideration
must therefore be given to consequences before
invoking any force majeure clause.
In the absence of a force majeure
clause, if the contract is frustrated
must the non-performing party pay
If a party fails to perform their obligations but the
impact of Covid-19 does not lead to frustration
of the contract, the other party may be entitled to
claim damages for breach of contract.
As outlined above, if frustration is established,
the Law Reform (Frustrated Contracts) Act
1943 allows recovery of monies paid under the
contract before it was discharged, subject to an
allowance, at the court’s discretion, for expenses
incurred by the other party.
However, Section 2 of the 1943 Act excludes
contracts for carriage of goods by sea, the sale
of specific goods, insurance contracts and
certain charter parties. Yet regardless of whether
the 1943 act does apply, there may also be a
common law action against the non-performing
party for unjust enrichment if they are able
to benefit from a contract when they have not
performed their obligations.
Can we suspend performance of a
contract, or agree with the other
party to abandon the contract, if
Covid-19 makes it too difficult or
expensive to perform?
In the absence of an express contractual term to
suspend the performance of a contract there is
no general right to do so. However, the affected
party could approach the other party to request
a contract variation.
If this consent to suspend is not given and
the contract is not frustrated, by stopping
performance the affected party is in breach
of the contract. This may trigger termination
rights for the non-defaulting party and possible
recovery of loss and damages.
Contracting parties can end a contract by
agreeing to abandon it. However, this agreement
will need to be well documented to ensure there
has been an offer and acceptance of it.
If performance of a contract becomes more
difficult or expensive, the party who fails to
perform is in breach and must pay damages.
Even if abandoning the contract is not yet a
breach (because no obligations are currently
due), it could repudiate the contract. The other
party could then accept the repudiation, end
the contract and claim damages for all its loss
caused by the termination.
Can the parties vary the contract or
renegotiate its terms?
Yes, and this is often the best way to proceed if
If parties do agree to vary or renegotiate the
terms of their contract, they should comply
with any relevant requirements of the contract
(such as recording any variation in writing), and
carefully consider the long-term impact of any
proposed changes to deal with the immediate
situation that projects are currently facing.
Accurate record-keeping is essential.
The parties should consider whether changing
one aspect of their arrangement has a knock-on
effect on other provisions, such as:
• Payment provisions.
• Whether contractual insurance requirements
need amendment, and whether the parties
have the relevant insurance cover to comply
with those obligations.
• Whether the changes they agree are in any
way time-limited, so that they apply only for a
• Whether the changes need to be reflected
elsewhere in the contract chain: either down
(to subcontractors and suppliers) or up (to
funders and customers).