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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

What should I be mindful of in relation to pregnant workers? Is there a right to suspend?

Yes, but as a last resort. In summary, the law requires employers:

  • to assess the workplace risks posed to new or expectant mothers or their babies;
  • to alter the employee’s working conditions or hours of work to avoid any significant risk to them;
  • where it is not reasonable to alter working conditions or hours, or would not avoid the risk, to offer suitable alternative work on terms that are not “substantially less favourable”;
  • where suitable alternative work is not available, or the employee reasonably refuses it, the employer should consider whether it is appropriate to suspend the employee on full pay.
What perceived gaps do you see in the Building Safety Act 2022 (especially in terms of pending consultations and secondary instruments)?Comments on the value of the Martlet v Mulalley judgment in fire safety cases/unsafe cladding cases

The Act was obviously subject to much debate and criticism as the Bill passed through Parliament. It is difficult to properly assess any gaps until after the necessary secondary legislation has been published and comes into force (along with the remainder of the Act), but some of the likely issues include:

  • The impact on the insurance market, and the (lack of) availability and increased cost of insurance in light of the provisions of the Act
  • How the introduction of retrospective claims will affect the market, both in relation to how parties might go about trying to prove matters which are 30 years old, but also the lack of certainty for those potentially on the receiving end of these claims which they previously had by virtue of the Limitation Act provisions
  • Whether the definition of higher risk buildings is correct, or will require some refinement.

The Martlet v Mulalley case provides some useful observations and clarifications, for example that designers cannot necessarily rely on a ‘lemming’ defence that they were simply doing what others were doing at the time, that ‘waking watch’ costs are generally recoverable, and commentary on certain specific Building Regulations. The judgment however made clear that much of the case turned on its specific facts, so it is useful from the perspective of providing some insight as to how the Courts will deal with cladding disputes in future, rather than setting significant precedents to be followed.

Will I have to go to court?

The vast majority of disputes settle without ever reaching a final hearing with something in the region of 2-5% of all cases actually ending up in court at a final trial.  So whilst it is very unlikely you would need to attend a court hearing, it is always a possibility.

What will my case look like going forward and what are the courts doing?

During the Covid 19 crisis lawyers and the courts have had to adapt with hearings being heard remotely and with more electronic communication. It is clear that going forward, some of these changes will become more permanent.

The Lord Chancellor, Robert Buckland QC MP, has spoken last week regarding changes to the justice system following the COVID-19 pandemic and we know that there is a significant backlog of work that needs to be processed.

Firstly, 10 sites have been identified for ‘Nightingale courts’ which will allow for better social distancing. The authorities have suggested that it is a possibility that courts will need to stay open for a longer time or at weekends, to increase the number of cases that can be heard safely on any given day. This will enable more cases to be heard in a day and therefore a swifter outcome for your case. The standard of video technology will also continue to improve, with plans for new technology being rolled out across all courts form July onwards. The enhanced use of technology may result in matters being heard more efficiently, decreasing the time spent during each hearing.

HMCTS is working to expand access to audio and video technology to support more and new types of hearings. There has been an increase in the use of new and varying equipment over the lock-down period. With the appropriate systems in place, many more hearings could take place on platforms such as the Cloud Video Platform (CVP). Throughout July, the CVP will be more readily available to Country courts. There will be further hardware rolled out to improve the quality of video hearings, and there will be more efficient methods used to organise video lists.

The increased use and training of CVP means that witnesses and advocates may not need to attend court and could attend the hearing remotely. This will give you increased flexibility, enabling you to attend from your office or home. The CVP is efficient and simple to use, with no complex functions; making it user-friendly. This should make litigation more time and cost effective (albeit that there will be the cultural challenge of having less contact with your legal team or the court experience).

How should contracting authorities work with PFI providers?
  • Working with PFI providers to get contingency plans up to date
  • If a PFI provider is struggling to achieve service delivery requirements due to Covid-19, then local arrangements should be put in place to:
    • maintain unitary charge payments
    • revise contract requirements/standards

moderating payment and performance regimes where appropriate.

  • In any event, you may wish to review and adjust your requirements to reflect the current situation. It is possible that some requirements can be relaxed, whereas others need to be tightened. For example, there may be an increased need for cleaning and maintenance in certain areas of your PFI premises or the layout of the premises and/or room uses may have temporarily changed. With staff illness and shortage likely to be an issue, you may also wish to consider if the resource can be moved from one area to another to help maintain essential services.
  • When putting local bespoke arrangements into place it is vital that:
    •  Contract requirements or performance standards are not relaxed to the point where health and safety are put at risk.
    • It is made clear that the arrangements are temporary and that matters will return to normal as soon as the Covid-19 emergency is over. Indeed the guidance note makes clear that if assets temporarily close they should be kept in such condition that they can be immediately up and running when this emergency is over. In such instances, likely a basic level of maintenance and security will therefore be required as a minimum.