One impossible for the party to be excused from its obligations and, if the absence of a force majeure clause, the common law position will For a further analysis of material adverse change clauses and the COVID-19 virus outbreak see Mac Clauses. Held: the contract was not discharged by reason of frustration. frustration, impossibility and illegality. Our investment in training and development of our team is insurmountable. For an event to fall within the doctrine of supervening Negligence , also known as Last Clear Chance , four conditions must be satisfied. If the buyer insisted on performance of the contract by the seller, the seller would be complying with his contractual duty, but he would also be breaking the law as the contract would be illegal. Frustration is an English contract law doctrine that acts as a device to set aside contracts where an unforeseen event either renders contractual obligations impossible, or radically changes the party's principal purpose for entering into the contract. To find out more see our Privacy Policy. The defender, however, refused to use the vessel claiming that the contract had been frustrated. Such impossibility usually arises due to facts that the promisor had no reason to anticipate and did not contribute to the occurrence of. extinction) of the agreement for the duration of the applicable force Supervening: Unforeseen, intervening, an additional event or cause. This difference in approach taken by the Court of Appeal in both cases is sometimes difficult to understand. After the murder of schoolchildren and a teacher at Dunblane Primary School in 1996 by Thomas Hamilton, the British government made it illegal to own particular models of firearms. The continuing fallout from Coronavirus or COVID-19 has led to all sorts of sporting and cultural events being cancelled or postponed. Nevertheless, absolute factual impossibility is not required; Therefore, anyone who entered a contract to purchase firearms shortly before the legislation was introduced could not force the supplier to perform the contract. If an employee is killed or permanently incapacitated, it will be very difficult to argue that the employment contract should be allowed to continue. Google Scholar. In the English case of Matsoukis v Priestman [1915] 1 KB 681 Bailhace J in English High Court noted that the: Bailhace J was of the view that force majeure clauses could cover events such as industrial action, but certainly not bad weather or football or funerals. 1944). Tsakiroglou v Noblee Thorl GmbH [1961] 2 ALL ER 179 the sellers had agreed to transport Sudanese ground nuts from Port Sudan in the Red Sea to Hamburg in Germany. to take paying guests for a cruise around the fleet – despite the fact that King Edward VII would not be personally reviewing the fleet due to his unexpected illness. The new King was unable to participate or attend a variety of events to celebrate his accession to the British throne following the death of his mother, Queen Victoria. Thus, in terms of Section 32 of the Contract Act, if the designated event on which the contract is contingent becomes impossible, such contract becomes void. force majeure clause would cover non-performance arising from the particular community will determine whether performance is The pursuer brought an action against the defender for payment of the balance of the rent. net.) The contract may now be impossible to perform or the contract may have been rendered illegal by changes in the law. by Corbin in Supervening Impossibility of Perforll'ting Conditions Precedent (1922) 22 Columbia Law Rev. from performing some or all of its obligations under an agreement When one party is to blame for the failure to perform his obligations under the agreement, this represents a breach of contract and the innocent party can raise the appropriate action. COMMON LAW POSITION – SUPERVENING IMPOSSIBILITY OF PERFORMANCE. LRA Section 189A (13) applications: is the court guardian or nanny? Many people will have booked getaways to foreign climes and events have now completely overtaken such plans. occurrence”). So, in a sense, we are being forced to react to changing circumstances and rely upon established legal contractual principles which govern the termination of agreements i.e. majeure event. Art 61 determines the fate of a treaty following a specific instance of supervening impossibility of performance, whereas Art 62 covers the fundamental change of circumstances in more general terms (→ MN 39). In terms of a South African common law doctrine known as “supervening impossibility”, each party’s obligation to perform in terms of an agreement and their respective rights to receive performance under that agreement will be extinguished in the event that the performance by a party of its obligation becomes objectively impossible as a result of unforeseeable and unavoidable events, which are not the fault of any party … law position in respect of impossibility of performance which, as Perhaps one of the best known examples of frustration can be seen in the case below: Taylor v Caldwell (1863) the Surrey Gardens and Music Hall was hired by the pursuers from the defenders for the purpose of holding four grand concerts and fêtes. Before the first concert on 17 June 1862 could took place, the hall was completely destroyed by fire. This website uses cookies to remember you and improve your experience. Held: by the House of Lords that a party will still have a duty to perform a contract even if this means that performance is more difficult or expensive than was originally intended by the parties. A link to Ross Campbell’s article can be found below: https://brodies.com/blog/dispute-resolution/the-power-of-force-majeure-clauses/. Banking on a resignation with immediate effect? The reason behind the hire of the flat was, therefore, a material term of the contract. maior (“major However, temporary incapacity is not enough unless it affects the performance of the contract in a really serious way. Unless the court finds these three requirements satisfied, the plea of impossibility must fail. event that the performance by a party of its obligation becomes We are also about to enter the holiday season with the Spring Break and Easter Weekend just over the horizon. Impossibility of Performance: A Treatise on the Law of Supervening Impossibility of Performance of Contract, Failure of Consideration, and Frustration. They are taken from the Code Napoleon and they were inserted by this Romanian gentleman or by his advisers, who were no doubt familiar with their use on the Continent.”. Lord Justice Vaughn-Williams was of the opinion that frustration of contract was not limited to either the destruction or non-existence of the subject matter of the contract. Many translated example sentences containing "supervening impossibility" – Swedish-English dictionary and search engine for Swedish translations. force majeure clause excuses a party (usually for a specified time) If contracting parties were allowed to plead supervening impossibility, it would make the whole basis of contract … Travel and tourism will obviously be disproportionately affected by these restrictions. The very phrase force majeure conjures up images of an unstoppable force that sweeps away the accepted rules or conventions – almost akin to the idea of damnum fatale or an act of God. Held: By the English High Court that it was clearly impossible for the contract to be performed because it relied on the continuing existence of the venue. In other words, did the parties share the same intentions? Supervening impossibility of an obligation also generally excuses a creditor from rendering a counter-performance that is reciprocal to the performance that has become impossible. The law on force majeure and supervening impossibility of performance The basic rule of South African law is that contracting parties will be held to their promises. by Pierre Burger, Director and Shmuel Moch, Senior Associate. force”) or casus Impossibility and frustration are often used as interchangeable expressions. In Krell v Henry [1903], Lord Justice Vaughn-Williams was of the opinion that frustration of contract was not limited to either the destruction or non-existence of the subject matter of the contract. In terms of a South African common law doctrine known as “supervening impossibility”, each party’s obligation to perform in terms of an agreement and their respective rights to receive performance under that agreement will be extinguished in the event that the performance by a party of its obligation becomes objectively impossible as a result of unforeseeable and unavoidable events, which are not the fault of … Some words of warning: the courts may be unwilling to use frustration as a means of terminating an employment contract if other ways of achieving this result are available. A supervening impossibility, in terms of the South African common law, is where the performance in terms of a contract becomes impossible through no fault of either of the parties. The pursuer’s flat was on the route of the proposed coronation procession of the new King, Edward VII, which was scheduled to take place on 26 and 27 June 1902. 1941. xl and 255 pp. performance may still be objectively impossible if such performance For this reason, force majeure clauses may allow for a At the moment, the scale of COVID-19 has completely taken Governments, societies, business, cultural, sporting organisations and individuals completely by surprise. force majeure clause or (in the absence of an applicable clause), the The defender, who was anxious to view the procession, responded to the advertisement and entered into an agreement to hire the flat on the days specified. For those parties wishing to rely upon force majeure clauses, drafting the term may be crucially important. there are some force majeure events which might be considered the inability of parties to perform their obligations in terms of We focus on people. Contracts can become illegal because Parliament introduces legislation to this effect. In analysing the common law, the court held that if provision is not made contractually by way of a force majeure clause, “a party will only be able to rely on the very stringent provisions of the common law doctrine of supervening impossibility of performance, for which objective impossibility is … prior to doing so. their South African law governed agreements. © 2020 Werksmans Attorneys, All rights reserved. negotiated. The clinching argument in the defender’s favour was that both parties clearly entered into the contract with the same intention. objectively impossible and may allow for the suspension (rather than of an obligation will not be objectively impossible if that Hearts owner Ann Budge says she would consider legal action should her club be relegated from the Scottish Premiership with eight games left: Coronavirus: Hearts would seek legal advice if relegated. The incapacity of a person who is to perform a contract may discharge it. An announcement was made on 24 June stating that the procession was to be cancelled owing to the King’s illness. the pandemic). objectively impossible; performance might in law be regarded as common law doctrine of supervening impossibility in respect of Edited by Glanville Williams. In American Law it is the Theory of Impossibility and Impracticability and in English Law it is the Frustration of Contract and Frustration of Purpose under the Doctrine of Frustration and under Indian Legal System it is covered under section 56 of the Indian Contract Act 1872. However, frustration can also occur in situations where physical destruction of the subject-matter of the contract may not be the issue. The phrase “force majeure” has also been making more of an appearance than is commonly the case. Two famous cases which are particularly instructive are the ‘Coronation Cases’ because they concern the consequences of changing circumstances. The King was to review the fleet personally. non-performance as a result of the COVID-19 virus outbreak is performance has merely become more onerous, difficult or costly. translation and definition "supervening force", Dictionary English-English online. Such a contract is discharged by the death of the person who was to perform it. Whereas, under Section 56, the parties have not, while entering the contract, considered any such event due to which the contract may become void. If supervening impossibility can be proven, the obligations of the parties under the contract will be discharged and the contract will be terminated. 421, 423: "... a fact the existence or future occurrence of which is uncertain, and in the absence of which certain contemplated legal re­ lations will not exist." The closure of the Suez Canal did not mean that the sellers’ duties were discharged by reason of frustration of contract. Events can also make further or future performance of contracts illegal e.g. The illness of King Edward resulted in a second legal action. The standard is high to prove that where performance can still be made, albeit at a higher cost or with economic hardship, the courts are unlikely to consider this to be a supervening impossibility. which prevent that party performing its obligations under that COVID-19 virus outbreak, the provisions of that clause would need to summary, any analysis of whether a party may rely on an applicable be carefully analysed. The defender wished to transport paying guests from Herne Bay to Spithead to see the naval review. It might be highly advisable to have a list of events or circumstances which trigger operation of the clause; and then have a catch-all provision or belt and braces term to cover things you might not have explicitly specified (as per McCardie J’s remarks in Lebeaupin v Richard Crispin [1920]. The cancellation of an event can frustrate the performance of a contract where that event is an absolutely material term of the agreement. Frustration can only be used to have the contract discharged in situations where neither party is to blame. In terms of the application of the doctrine of supervening impossibility, the Supreme Court of Appeal in Transnet Ltd t/a National Ports Authority v Owner of MV Snow Crystal (quoting older authority) held that in order to determine whether the doctrine applies, it is necessary to look at factors such as the nature of the contract, the relationship of the parties, the circumstances of the case and the nature of the impossibility. explained below, requires the performance to be objectively This time, however, the English Court of Appeal took a completely different approach to the issue of frustration of contract. On a plain reading of Section 56 of the Contract Act, it is evident that the section … Herne Bay Steamboat Co v Hutton [1903] 2 KB 683 the pursuers had entered into a contract to hire a steamship to the defender for two days. I’m not pretending to be Nostradamus (or for our Scottish readers, the Brahan Seer or Thomas the Rhymer) when I predict that many lawyers and their clients will actively be looking at the usefulness of force majeure clauses. ? the outbreak of war. 1 The term force majeure is a direct French translation of the Latin vis maior, which is part of the South African common law and is dealt with below. Many European Union countries have reintroduced border controls and curbs on free movement of persons which would normally be a clear breach of European Treaties (e.g. More about these matters shortly. liability. The defender refused to pay the balance of the rent for the flat by reason that events had frustrated performance of the contract. Reinforcing this fact, was the fact that the defender was only entitled to use the flat during the daytime. So whether, will the courts permit the application of a force majeure clause will turn on the wording of the clause. “market-standard”, force majeure clauses are often heavily Let’s now turn to situations where individuals have to react to unexpected events without having the benefit of a force majeure clause in the agreement. This meant that the distance the ship had to travel from Port Sudan to Hamburg was greatly increased and this would also mean a dramatic increase in the costs of carriage in respect of the goods. To the extent that FM is not applicable, parties need to look to the common law for assistance. Destruction of subject matter by five explosive spoilage of dates by water and sewage due to sinking of ship The pursuers, however, brought an action for damages against the defenders for wasted advertising costs. As we have seen, a situation involving the physical destruction of the subject-matter of the contract will discharge the parties from performance of their duties by reason of frustration. supervening impossibility are advised to obtain expert legal advice Parties include force majeure clauses to modify the common The effect of such impossibility is that it makes the contract void and the parties are discharged from further performance of the contract and thereby contract is discharged, (Section 56, Indian Contract Act, 1872). Employees who have had a lengthy prison sentence imposed on them by a criminal court may find it very difficult to argue against the employer’s proposition that the contract of employment has been terminated by reason of frustration. Stevenson & Sons Ltd v AG für Cartonnagen Industrie (1918) AC 239 an English company, Stevenson, was in partnership with a German company acting as a sole agent to sell the German company’s goods. In an English law-governed contract, a contract is discharged if its performance becomes illegal by English law. agreements to which they are party and the extent to which such Supervening impossibility or illegality involving action contrary to law or public policy. The ship was to take the fastest route to Europe through the Suez Canal. (15s. standard of conduct generally acceptable in business dealings in the The doctrine of frustration is based on the maxim Lex non cogit ad Impossibilia. Held: by the English Court of Appeal that the cancellation of the event frustrated the contract and discharged the parties from their obligations under it. Performance is factually possible, but illegal or it has become so difficult or It’s extremely doubtful. The charterers hired another ship and the pursuer turned to the insurers. “supervening impossibility”, each party’s obligation to Don’t count on it! burdensome that the party cannot reasonably be expected to perform. Notwithstanding supervening impossibility of performance, there is nothing in South African law that prevents parties from making special provisions in their contract for happenings that would otherwise discharge the contract and excuse non-performance. Be aware, however, that extremely wide catch-all provisions may be disallowed because they are not within the normal meaning of the term (see Tandrin Aviation Holdings Ltd v Aero Toy Store LLC [2010] EWHC 40 (Comm)). The vessel was stranded whilst on its way to Newport. should certain defined circumstances (a force majeure event) arise, “words ‘force majeure’ are not words which we generally find in an English contract. A The pursuer had advertised his flat for rent during the daytime on 26 and 27 June for the purpose of viewing the procession. This could occur in situations where it is possible for the employer to dismiss the employee entirely fairly by reason of a lack of capability (e.g. As lawyers, could we have pre-empted or foreseen that events (I’m speaking in the general sense here) might render contractual performance highly unlikely or well nigh impossible? The English Court of Appeal took different approaches in each of the cases: Krell v Henry [1903] 2 KB 740 the pursuer was the owner of a flat in the central London district of Pall Mall. This is often exercised by the inclusion of the standard force majeure clause. That said McCardie J was at pains to point out: “A force majeure clause should be construed in each case with a close attention to the words which precede or follow it, and with a due regard to the nature and general terms of the contract. Two House of Lords’ decisions are excellent authority for this proposition –. In Automotive aftermarket shake-up – The Competition Commission’s final Automotive Aftermarket Guidelines, COVID-19 Temporary Employer / Employee Relief Scheme (“TERS”) audit pack, Considerations for the digital economy – Insight from UNCTAD. Accordingly, any analysis of whether a party would be able to rely on the defence of supervening impossibility in respect of its inability to perform its obligations in terms of an agreement as a result of the COVID-19 virus outbreak must take into account all of the surrounding circumstances of that case. provisions or South Africa common law principles. The effect of the clause may vary with each instrument.”. Accordingly, in order to determine whether a specific Supervening impossibility is the impossibility arising after the formation of a contract. However, our law makes an exception to this and will not consider a party to be in breach of an agreement if a recognised case of “supervening impossibility of performance” occurs. Legal Impossibility (typical Q) Performance becomes impossible after the conclusion Subjective, there is fault Question: If at the time of concluding the contract, it is legally impossible to render the performance, Is the contract void due to non- compliance with the requirement of … Parties who intend to rely on In Krell v Henry, both parties had clearly intended that the purpose of the contract was to view the coronation procession (which was postponed). By R. G. McElroy. Business Law What is ‘Supervening Impossibility’ What are their effects upon the contract (a) Discuss the term ‘Continuing Guarantee’. The pursuer had insurance with the defenders to protect himself in the event that the charter might be prevented from being carried out. Could anyone have predicted the situation that we are now in with COVID-19 and drafted an appropriate clause to address these unprecedented times? TT7T.. , : *Ar I declare that "Supervening Impossibility of Performance in the South African Law of Contract" is my own work and that all sources used or Events which make the performance of the contract impossible subsequent to the formation of the contract known as a supervening or subsequent impossibility. objectively impossible as a result of unforeseeable and unavoidable In normal circumstances, Business B will be in breach of the agreement and will be liable for damages. Such Many translated example sentences containing "supervening impossibility" – German-English dictionary and search engine for German translations. Whilst force majeure clauses generally apply to the impossibility of performance of obligations which are enforceable, some agreements may include a “material adverse change” clause which would apply to obligations under an agreement that has not yet become effective. Factual impossibility is not a defense to the crime of attempt. The Coronavirus or COVID-19 is not merely a health issue – it has also become something of a legal minefield for society. Jackson v Union Marine Insurance Co (1874) LR 10 CP 125 the pursuer owned a ship which had been chartered to go with all possible speed from Liverpool to Newport for the purpose of loading a cargo bound for San Francisco. agreement. The pursuers brought an action against the defender for the balance of the fee of £250 (a considerable sum in those times) owed by the defender who was refusing to pay for the hire of the boat. However, this arises at the time when the promisor's performance is due. They suggested that the pursuer should sue the charterer for breach. either force majeure clauses or the common law doctrine of — Also termed physical impossibility; impossibility of fact. Notwithstanding this, parties often include a force majeure clause in Cambridge: The University Press. Yet in the later English High Court decision Lebeaupin v Richard Crispin [1920] 2 KB 714, force majeure was given a much broader meaning to include events such as war, bad weather, industrial action and, interestingly, epidemics. It was also important to identify the substance or the purpose of the agreement. guaranteed performance, then the fact that performance subsequently events are known as vis The sellers had attempted to sue the buyers for the price of the goods, but this claim was dismissed. How can it be revoked? applied, may result in the extinguishing of the agreement between the Neither party was responsible for this incident. I never thought that the subject of impossibility and frustration in relation to contract would become such a popular topic of everyday conversation; but it has. Due to the King’s illness, an official announcement was made cancelling the review. (a) What do you understand by the term Implied ‘Authority of a partner’? Critically, thousands of people will have paid something up front for football season tickets and holidays and they will be anxious to know where they stand legally. Supervening impossibility of performance in the South African law of contract by William Arthur Ramsden, 1985, Juta edition, in English In Herne Bay Steamboat Co v Hutton, the purpose of the defender in hiring the steamship was to see the naval review, but this was not the purpose of the owners who were not the slightest bit interested why the vessel had been hired. Unlike supervening force. receive performance under that agreement will be extinguished in the ... A Aust Modern Treaty Law and Practice (2nd edn 2007) 293–296. In terms of a South African common law doctrine known as The Royal Navy was assembling at Spithead to take part in a naval review to celebrate King Edward’s coronation. We are seeing the introduction of emergency powers legislation across the World in response to COVID-19 and this will undoubtedly have a huge impact on a range of contractual obligations. Had the defender failed to communicate his motivation for hiring the flat, then the contract would have remained capable of enforcement by the pursuer. Extinction of … force majeure is foreign to South African common law1. factual impossibility. suspension of performance, where such performance is not necessarily Since the formation of a contract, circumstances affecting the agreement may have changed dramatically (i.e. It would still have been perfectly possible for the defender to take his passengers on a cruise to see the assembled fleet. The main purpose of the contract could still be achieved i.e. This makes no difference to the owner of the carriage who will still expect to be paid for the hire of his vehicle. Business B is entitled to invoke the common law principle of supervening impossibility, if the agreement was concluded prior to the lockdown, being the event which rendered the performance of obligations impossible. A supervening cause is an event that operates independently of anything else and becomes the proximate cause of an accident. becomes factually impossible does not absolve that party of The sellers would have to ship the goods around the alternative route of the Cape of Good Hope in South Africa. parties. Outbreak of wear, war restrictions legally to trade enemy. COVID-19 4 However, it is important to understand that the common law doctrine of frustration as propounded in English law is distinct from the statutory provision of supervening impossibility and illegality under Indian law. events, which are not the fault of any party to that agreement. fact-specific and can be complex. Lord Justice Vaughn-Williams compared the situation in Herne Bay Steamboat Co to someone who hires a carriage to go and see the Epsom Derby, but the outbreak of some unforeseen epidemic means that the races are cancelled. https://seancrossansscotslaw.com/2019/02/10/frustration-of-contract/, https://seancrossansscotslaw.com/2019/03/25/locking-horns-frustration-of-contract-part-2/, https://seancrossansscotslaw.com/2019/11/23/pay-up-or-frustration-of-contract-part-3/, https://seancrossansscotslaw.com/2019/08/28/stormy-weather-im-at-the-end-of-my-tether/, https://seancrossansscotslaw.com/2020/02/25/welcome-to-austria/. Well, yes the concept of Force Majeure clauses is recognised in contract law – although the linguists amongst us may recognise that it’s not a native species of English or Scots law. , be important to identify the substance or the purpose of the supervening impossibility in english law of termination of contractual obligations performance... An appropriate clause to address these unprecedented times requirements satisfied, the English of... Drafted an appropriate clause to address these supervening impossibility in english law times which might be considered “ market-standard ” force... And was in turn entitled to use the flat by reason of of! Flat by reason that events had frustrated performance of the contract may have been perfectly possible for hire! Family of lawyers drafting the term may be crucially important the continuing fallout from Coronavirus or COVID-19 is merely. Assembling at Spithead to see the assembled fleet, 25 Cal.2d 48 ( Cal arising after formation. Due to the formation of a person who is to blame will booked. Becomes the proximate cause of an obligation will not be the issue of frustration of,. Non cogit ad Impossibilia events are known as vis maior ( “ occurrence! Consideration, and frustration charterers hired another ship and the contract had been frustrated this time, however, hall... Consideration under English law become more onerous, difficult or costly two ways of dealing an. That has become impossible entitled to use the flat during the supervening impossibility in english law on 26 and June... Season with the defenders to protect himself in the defender’s favour was that both parties clearly into! Was also important to identify the substance or the purpose of the goods around the route. Although there are some force majeure clause will turn on the law supervening... – German-English dictionary and search engine for German translations fortuitus ( “ major force ” ) found. Moch, Senior Associate stating that the promisor 's performance is vital completely different approach to the illness King. Is to perform or the contract will be discharged and the pursuer turned to the King’s illness, an announcement. 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Is discharged if its performance becomes illegal by changes in the law supervening! And FAILURE of CONSIDERATION, and frustration about to enter the holiday season with the defenders for advertising... Will, however, be important to identify the substance or the contract may not be impossible... Pursuers, however, brought an action against the defender was only entitled seek... Generally find in an English law-governed contract, circumstances affecting the agreement the pursuer should the. This is where knowledge of the agreement may have changed dramatically ( i.e because they concern the consequences of circumstances. That FM is not applicable, parties often include a force majeure ” also. 189A ( 13 ) applications: is the impossibility arising after the of... Outbreak of wear, war restrictions legally to trade enemy been perfectly for! Disproportionately affected by these restrictions that is reciprocal to the illness of King Edward resulted in a legal..., and frustration are often heavily negotiated cruise around the fleet approach taken by the term may be crucially...., FAILURE of CONSIDERATION, and frustration wording of the balance of contract. ”, force majeure clause in their South African law governed agreements hire of vehicle... Such events are known as Last Clear Chance, four Conditions must be satisfied is. Absence of a bailee English contract an unexpected situation which affects contractual performance: Treatise! Issue – it has also been making more of an event that operates independently of anything else becomes! Passengers on a cruise around the alternative route of the contract may not be the issue of frustration contract... Death of the contract impossible subsequent to the performance of an obligation generally! Person who was to be cancelled owing to the owner of the contract impossible subsequent to the of!