The Covid-19 virus has had a profound impact on social and economic life. Measures adopted by the Commonwealth and State governments to halt the virus’s spread have suspended many aspects of civil society. Large sectors of the economy have been deliberately shut down. Those businesses still operating are experiencing significant disruptions and grappling with a substantial contraction in economic activity.
In the circumstances, commercial parties are inevitably considering whether they can perform their contractual obligations and, if not, what can be done about it?
The starting point under Australian law is somewhat unsympathetic: a party who fails to perform a contract due to an external event is in breach. However, two possible exceptions to this position have been at the fore of attempts to avoid liability: (1) force majeure clauses; and (2) the doctrine of frustration.
This note by Angus O’Brien briefly explains these doctrines and their potential operation in these unprecedented circumstances. It was subsequently republished on the LexisNexis Info Hub COVID-19.
