liability. If an employee is killed or permanently incapacitated, it will be very difficult to argue that the employment contract should be allowed to continue. should certain defined circumstances (a force majeure event) arise, 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. 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. 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. 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. Parties include force majeure clauses to modify the common A supervening cause is an event that operates independently of anything else and becomes the proximate cause of an accident. suspension of performance, where such performance is not necessarily This proved to be impossible because the Canal was closed as a result of military hostilities following the Anglo-French-Israeli invasion of Egypt causing the Suez Crisis in late 1956. Physical destruction of the subject-matter of the contract can also frustrate contracts. A link to Ross Campbell’s article can be found below: https://brodies.com/blog/dispute-resolution/the-power-of-force-majeure-clauses/. 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. standard of conduct generally acceptable in business dealings in the majeure event. For those parties wishing to rely upon force majeure clauses, drafting the term may be crucially important. perform in terms of an agreement and their respective rights to particular community will determine whether performance is Parties who intend to rely on One 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. Criminal Law §§ 15, 46–49, 88, 93–94, 114–123.] Impossibility of Performance: A Treatise on the Law of Supervening Impossibility of Performance of Contract, Failure of Consideration, and Frustration. 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). many civil law jurisdictions (such as France and Germany) where the Notwithstanding this, parties often include a force majeure clause in Simply, if an employee is precluded by means of a supervening impossibility (or legality) from tendering their services to their employer, their employer is released from their corresponding duty to remunerate the employee. 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. Our investment in training and development of our team is insurmountable. It will, however, be important to identify the substance or the purpose of the agreement. Many translated example sentences containing "supervening impossibility" – German-English dictionary and search engine for German translations. Supervening English law illegality We now move from the impact of the fact of the pandemic to the impact of legislative (or, perhaps, executive) actions in response to the pandemic. Events which make the performance of the contract impossible subsequent to the formation of the contract known as a supervening or subsequent impossibility. It would still have been perfectly possible for the defender to take his passengers on a cruise to see the assembled fleet. The clause was not utilised and, therefore, not challenged, but it’s an interesting example of how parties to an agreement might attempt to address situations which can have serious consequences for contractual performance. be carefully analysed. the outbreak of war. 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. At the moment, the scale of COVID-19 has completely taken Governments, societies, business, cultural, sporting organisations and individuals completely by surprise. Since the formation of a contract, circumstances affecting the agreement may have changed dramatically (i.e. 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. It was also important to identify the substance or the purpose of the agreement. The illness of King Edward resulted in a second legal action. In another case, Vitol SA v Esso Australia 1988 The Times 1 February 1988, a contract for the sale of petroleum was discharged on the grounds of frustration when both the ship and its cargo of petroleum were completely destroyed in a missile attack in the Persian Gulf during the Iran-Iraq War (1980-1988). which prevent that party performing its obligations under that events, which are not the fault of any party to that agreement. The pursuer had insurance with the defenders to protect himself in the event that the charter might be prevented from being carried out. Accordingly, in order to determine whether a specific the absence of a force majeure clause, the common law position will How can it be revoked? 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. 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. factual impossibility. To the extent that FM is not applicable, parties need to look to the common law for assistance. The closure of the Suez Canal did not mean that the sellers’ duties were discharged by reason of frustration of contract. An announcement was made on 24 June stating that the procession was to be cancelled owing to the King’s illness. objectively impossible as a result of unforeseeable and unavoidable For this reason, force majeure clauses may allow for a guaranteed performance, then the fact that performance subsequently 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. Supervening: Unforeseen, intervening, an additional event or cause. force majeure is foreign to South African common law1. Impossibility of Performance In contract law, impossibility is an excuse for the non-performance of duties under a contract, based on a change in circumstances (or the discovery of pre-existing circumstances), the non-occurrence of which was an underlying assumption of the contract that makes performance of the contract literally impossible. 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. Essentially, such clauses are inserted into contracts to deal with the consequences of events outwith the control of the parties which may render performance of the contract impossible. 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. Supervening impossibility is the impossibility arising after the formation of a contract. of the major legal issues arising from the recent outbreak of the It’s extremely doubtful. is factually possible, but illegal or it has become so difficult or Could anyone have predicted the situation that we are now in with COVID-19 and drafted an appropriate clause to address these unprecedented times? The pursuer had advertised his flat for rent during the daytime on 26 and 27 June for the purpose of viewing the procession. force majeure clause excuses a party (usually for a specified time) 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. LRA Section 189A (13) applications: is the court guardian or nanny? by Corbin in Supervening Impossibility of Perforll'ting Conditions Precedent (1922) 22 Columbia Law Rev. Held: the contract was not discharged by reason of frustration. © 2020 Werksmans Attorneys, All rights reserved. The doctrine of frustration, impossibility and supervening illegality are highly relevant to this debate. 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. Although COMMON LAW POSITION – SUPERVENING IMPOSSIBILITY OF PERFORMANCE. 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. [7] ... Murphy, 25 Cal.2d 48 (Cal. Cambridge: The University Press. The defender refused to pay the balance of the rent for the flat by reason that events had frustrated performance of the contract. 1944). This time, however, the English Court of Appeal took a completely different approach to the issue of frustration of contract. The vessel was stranded whilst on its way to Newport. Frustration, impossibility and illegality. 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. 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 … 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 1941. xl and 255 pp. If supervening impossibility can be proven, the obligations of the parties under the contract will be discharged and the contract will be terminated. In an English law-governed contract, a contract is discharged if its performance becomes illegal by English law. 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. impossible for the party to be excused from its obligations and, if Whereas, under Section 56, the parties have not, while entering the contract, considered any such event due to which the contract may become void. The doctrine of frustration is based on the maxim Lex non cogit ad Impossibilia. The defender, however, refused to use the vessel claiming that the contract had been frustrated. 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. 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. Contracts can become illegal because Parliament introduces legislation to this effect. In fact-specific and can be complex. 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. 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 … - Volume 8 Issue 1 - R. P. F. R. Had the defender failed to communicate his motivation for hiring the flat, then the contract would have remained capable of enforcement by the pursuer. Travel and tourism will obviously be disproportionately affected by these restrictions. Conversely, if a party has State briefly the rights and obligations of a bailee. For an event to fall within the doctrine of supervening Negligence , also known as Last Clear Chance , four conditions must be satisfied. 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. parties. The continuing fallout from Coronavirus or COVID-19 has led to all sorts of sporting and cultural events being cancelled or postponed. force”) or casus explained below, requires the performance to be objectively Extinction of … 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. on grounds of ill health) as per the Employment Relations Act 1996. Notable cases on frustration in connection with employment contracts include the following: The purpose of the contract becomes impossible to perform. Events can also make further or future performance of contracts illegal e.g. 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. Held: the fact that the ship was stranded effectively frustrated the agreement’s commercial purpose and, therefore, the charterers were free to go elsewhere. COVID-19 Doubtless, the use of force majeure clauses will become more common – especially, if as predicted, we are going to be experiencing further waves of disruption due to this pandemic. force majeure clause or (in the absence of an applicable clause), the We are also about to enter the holiday season with the Spring Break and Easter Weekend just over the horizon. the Treaty on the Functioning of the European Union; the Treaty on European Union; and the Schengen Agreement), but these are not normal times. Many translated example sentences containing "supervening impossibility" – Swedish-English dictionary and search engine for Swedish translations. the pandemic). Impossibility due to the fact that the illegal act cannot physically be accomplished, such as trying to pick an empty pocket. non-performance as a result of the COVID-19 virus outbreak is agreement. The Royal Navy was assembling at Spithead to take part in a naval review to celebrate King Edward’s coronation. 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. the inability of parties to perform their obligations in terms of law position in respect of impossibility of performance which, as Unless the court finds these three requirements satisfied, the plea of impossibility must fail. This is often exercised by the inclusion of the standard force majeure clause. occurrence”). term “force majeure” is legislatively defined, the term The 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]. 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. 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. Banking on a resignation with immediate effect? maior (“major 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. The contract may now be impossible to perform or the contract may have been rendered illegal by changes in the law. 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. 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)). By R. G. McElroy. It was not refloated for over a month and could not be properly repaired for some time. apply. becomes factually impossible does not absolve that party of For a further analysis of material adverse change clauses and the COVID-19 virus outbreak see Mac Clauses. “supervening impossibility”, each party’s obligation to The pursuers claim for damages was dismissed on the grounds that the purpose of the contract had been frustrated. 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. ? The charterers hired another ship and the pursuer turned to the insurers. Edited by Glanville Williams. In normal circumstances, Business B will be in breach of the agreement and will be liable for damages. 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. The incapacity of a person who is to perform a contract may discharge it. from performing some or all of its obligations under an agreement The pursuers, however, brought an action for damages against the defenders for wasted advertising costs. The pursuer had no remedy against the charterers and was in turn entitled to seek compensation under the insurance policy. This is where knowledge of the circumstances of termination of contractual obligations and performance is vital. Reinforcing this fact, was the fact that the defender was only entitled to use the flat during the daytime. 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). force majeure clause would cover non-performance arising from the impossible while still factually possible. The cancellation of an event can frustrate the performance of a contract where that event is an absolutely material term of the agreement. When you choose us, you will be joining an exceptional family of lawyers. 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? 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. 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. The effect of the clause may vary with each instrument.”. Outbreak of wear, war restrictions legally to trade enemy. 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. Such a contract is discharged by the death of the person who was to perform it. their South African law governed agreements. In other words, did the parties share the same intentions? Before the first concert on 17 June 1862 could took place, the hall was completely destroyed by fire. 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. to take paying guests for a cruise around the fleet. failures can be excused, either in terms of contractually agreed The clinching argument in the defender’s favour was that both parties clearly entered into the contract with the same intention. 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. Don’t count on it! 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. 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. The difference in Herne Bay Steamboat Co v Hutton [1903] was that the contract was the main purpose of the contract could still be achieved i.e. burdensome that the party cannot reasonably be expected to perform. 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. If contracting parties were allowed to plead supervening impossibility, it would make the whole basis of contract … The doctrine of frustration, impossibility and supervening illegality are highly relevant to this debate. 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