Covid 19: Frustration of Contracts and Careful Considerations.

The impact of Covid 19 on human lives across the world is very much unprecedented. Every life lost is a tragedy. This disease has not only impacted upon our heath but  has also led to alarming and worrying financial concerns for many families, individuals, businesses, companies etc. On 14 July 2020, the BBC confirmed that the UK, along with much of the rest of the world, is thought to be heading into the worst recession for decades.

Many companies, businesses, partnerships and/or individuals would have engaged in contracts prior to lockdown which, due to the current health crisis, may not have been completed and/or fulfilled or could have been delayed or hindered.

In these uncertain times would it be fair and/or reasonable for one contracting party to enforce upon the other party and/or insist upon the performance of strict contractual obligations/terms ?

The law/doctrine of frustration in the past has been used as tool to prevent injustice between contracting parties when there has been an unforeseen supervening event.

In the case of J Lauritzen AS v Wijsmuller BV, The Super Servant Two [1990] 1 Lloyds Rep 1 Lord Justice Bingham stated  the object of the doctrine of frustration “was evolved to mitigate the rigour of the common law's insistence on literal performance of absolute promises.. to give effect to the demands of justice, to achieve a just and equitable result, to do what is reasonable and fair, … to escape from injustice where such would result from enforcement of a contract in its literal terms after a significant change in circumstances”.

Lord Justice Bingham went on to state “since the effect of frustration is to kill the contract and discharge the parties from further liability under it, the doctrine must not be lightly invoked and must be kept within very narrow limits”

In the case of  Canary Wharf (BP4) T1 Ltd v European Medicines Agency [2019] EWHC 335 Mr Justice Smith referred to a multi factorial approach in determining whether a contract has been frustrated or not.  A number of tests have detailed/identified to assist the parties and/or the Court to determine whether a contract is frustrated and therefore at its end.

In light of Covid 19 it will not be unusual for parties to run arguments of frustration where contractual obligations have not been performed and/or have been hindered by the pandemic.

It is important to note that if a party elects to frustrate a contract and does not meet the frustration tests, that party will be seen to be repudiating the contract and could be at risk of being in breach of contract.

If you require advice and assistance in relation to your contractual obligations and/or any potential contractual disputes then we are more than happy to help. Contact us on 02392 98 1000 or email connect@verisonalaw.com 


Contractual disputes

  • Breach of contract
  • Trade disputes
  • On-line traders
  • Supply of defective goods/services
  • Claims under personal guarantees
  • Debt & asset recovery

Property disputes

  • Ownership disputes
  • Development disputes
  • Option agreements
  • Boundary disputes
  • Adverse possession
  • Easements
  • Rights of way
  • Enforcing securities
  • Charges
  • Restrictions & encumbrances
  • Land Registry applications
  • Property/estate management
  • Service charges

Construction disputes

  • Payment/certification disputes
  • Building defects
  • Sub-contractor disputes
  • JCT, NEC, RIBA & similar design/build agreements

Landlord & Tenant disputes

  • Rent arrears
  • Guarantor’s liability
  • Forfeiture/termination
  • Recovering possession
  • Dilapidations
  • Protected lease renewals
  • Breach of covenant
  • Disrepair claims
  • Unlawful assignment/sub-letting
  • Break clauses
  • Rent reviews

Professional Negligence

  • Solicitors
  • Surveyors
  • Accountants
  • Architects
  • Liquidators
  • Administrators & receivers

Recruitment disputes

  • Recovery of recruitment fees
  • Disputed cause of introduction
  • Candidate suitability
  • Dual introducers
  • Conduct of Employment Agencies and Employment Businesses Regulations 2003

Shareholder/partnership disputes

  • Ownership and transfers of equity
  • Unfair prejudice claims
  • Derivative actions
  • Partnership dissolution & winding up

Financial Mis-selling

  • Bank mis-selling
  • SWAPS/LIBOR claims

Protection of Intellectual Property rights

  • Domain name disputes/cyber squatting
  • Passing off
  • Breach of confidentiality
  • Copyright and trademark infringement

Making a claim for negligent advice

The client asked us to consider and advise on the conduct of their former solicitors during both of the cases.  We careful analysed many files and documents, including the former solicitors’ files, and concluded that the client had a claim.

We pursued the solicitors for negligent advice and handling of the cases, with a view to recovering our client’s losses.  This involved extensive dealings with the firm, through their professional indemnity insurers and city lawyers. 

They refused to pay the claim, despite being provided with considerable supporting evidence and legal argument during various attempts to negotiate and settle the dispute.

Pursuing the professional negligence case in the High Court

We started High Court proceedings, which the former solicitors defended by denying the allegations and raising a number of technical legal points. 

Ultimately we exerted sufficient pressure in the litigation to force a settlement before the case reached trial, resulting in our client recovering a six-figure sum. This represented the vast majority of all legal costs they had paid, as well as Verisona Law’s legal fees.

Individual Property Owner

“Verisona Law dealt with a complicated dispute with a former manufacturing supplier forced into administrative receivership. Their clear, calm advice never wavered: their tenacity and diligence provided our company with a successful result”.

MD of Textile Wholesaler

"Having recently used Verisona Law to help recover a commercial debt due to us, I would highly recommend them.  Jeremy was very professional and helpful, giving information throughout the case, and he was also very calm which really helped us."

Anonymous

"I would like to thank you for the first class service we have received from you. Your advice and the professional way you treated us throughout culminated in a result which, prior to your appointment, seemed a long way away."

Mr Herridge


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