Can I argue that my contract has been frustrated?
It could be possible depending on your contract. If there is no force majeure clause in a contract, it may be possible that the contract may have been “frustrated” by emergency legislation. In legal terms, a contract can be frustrated where an event occurs after it is entered into which was not contemplated by any party at the outset, is not due to the fault of any party, and which makes the performance of the contract impossible.
If this is the case, the contract could be “discharged”, meaning that the parties’ obligations under the contract are no longer binding.
It is possible that a contract could be frustrated within this particular legal doctrine by a change in the law that makes performance of a contract illegal. However, if it simply becomes more difficult, or more expensive, then the legal tests for frustration might not be satisfied. There are also limits to the application of the rule if the frustrating event was already known about at the time the contracted was entered into.
Again, careful legal advice will be required at an early stage. The rules about force majeure or frustration might help businesses that find themselves unable to perform a contract because of the coronavirus outbreak.
Any new contracts that are concluded should expressly deal with the possibility that performance might become more difficult, more costly, or impossible to perform.
Related FAQs
The fee payer that pays the fee to the contractor’s PSC for the services (end user client or agency) will be responsible for operating PAYE and deducting NIC’s. The fee payer must also pay employer NIC’s and where applicable the apprenticeship levy so there will be additional costs involved in the event of a change to employed status for tax purposes.
If the assessment concludes that the contractor is self-employed, the PSC can continue to be paid gross.
Although these measures fall short of the level of assurance given to employees both in terms of eligibility for an immediacy of access to payments, they are a vast improvement on the support for self-employed workers that has been put in place until now. Current support includes:
- Access to business interruption loans
- Self-assessment tax payments that were due in July 2020 have been deferred until January 2021
- VAT is deferred until the next quarter
- The introduction of Time to Pay arrangements under which deferrals for HMRC payments can be agreed
- The minimum income floor for universal credit has been suspended which will allow self-employed workers to access the equivalent of Statutory Sick Pay (SSP)
- Universal credit and tax credit payments to increase by £1000 per year
Employees on Flexible Furlough can engage in training during hours which you record your employee as being on furlough, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation or a linked or associated organisation.
Where training is undertaken by furloughed employees during hours which you record your employee as being on furlough, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time.
The reporting requirements relating to cases of, or deaths from, COVID-19 under RIDDOR apply only to occupational exposure, that is, as a result of a person’s work.
You should only make a report under RIDDOR when one of the following circumstances applies:
- an accident or incident at work has, or could have, led to the release or escape of coronavirus (SARS-CoV-2). This must be reported as a dangerous occurrence
- a person at work (a worker) has been diagnosed as having COVID-19 attributed to an occupational exposure to coronavirus. This must be reported as a case of disease
- a worker dies as a result of occupational exposure to coronavirus. This must be reported as a work-related death due to exposure to a biological agent
The Government has produced and published three new Procurement Policy Notes as a direct result of the ever changing Covid-19 environment.
PPN 01/20: Responding to COVID-19
The purpose of PPN 01/20 is to ensure that contracting authorities are able to procure goods, services and works with extreme urgency, to allow them to respond to the pandemic efficiently.
This PPN provides guidance for the following circumstances:
- Direct award due to extreme urgency (regulations 32(2)(c)) (click here to read our article regarding regulation 32)
- Direct award due to an absence of competition or protection of exclusive rights
- Call off from an existing framework agreement or dynamic purchasing system
- Call for competition using a standard procedure with accelerated timescales
- Extending or modifying a contract during its term
PPN 02/20: Supplier relief due to COVID-19
PPN 02/20 focuses predominantly on the supplier to assist in keeping supply chains open and ensuring that suppliers are kept financially sound during these unpredictable times.
This PPN provides guidance for the following circumstances:
- Urgent reviews of contract portfolios and to update suppliers if they believe they are at risk
- Put in place appropriate payment measure to support supplier cash flow
- Where contract payments are based on ‘payment by results’ make payments based on previous invoices
- Ask suppliers to act on a ‘open book’ basis and make cost data available to the contracting authority during this period
- Ensure invoices submitted by suppliers are paid immediately on receipt
PPN 03/20: Use of Procurement Cards
The third guidance note PPN 03/20 relates to the use of procurement cards to increase efficiency and accelerate payment to suppliers.
This PPN provides the following advice and urges organisations to arrange with their procurement card provider to:
- Increase a single transaction limit to £20,000 for key card holders
- Raise monthly limits on spending with procurement cards to £100,000 for key card holders
- Spend on procurement cards each month in excess of £100,000 should be permissible to meet business needs
Although the above advice has been provided, should these limits not be necessary, organisations should seek an appropriate transaction limit or monthly limit.
The PPN also advises that by 30 April 2020, in scope organisations should:
- Ensure that a number of appropriate staff have the authority to use these cards
- Open all relevant categories of spend to enable these cards to be used more widely