Handling and Discharge of Contractual Obligations during Covid-19

In addition, the affected party may invoke the doctrine of “frustration” to argue that it no longer needs to perform its future obligations because the subject matter of the contract has been thwarted. However, for this doctrine to apply in English law, it must be impossible (not only more difficult or non-economic) to perform the contract, so there will likely be relatively limited circumstances in which it will apply in the current situation. However, if the part of the obligation that cannot be fulfilled is not negligible and the inability to perform that part is due to an event independent of the liability of one of the parties, an epidemic could potentially be considered such an event), the other party may terminate the contract if the partial performance does not meet its needs. Petroterminal De Panama, 107 A.D.3d 497, 498, 968 N.Y.S.2d 435, 498 (1st Dep`t 2013), the New York Appeals Division upheld a trial court`s decision that the seizure of the plaintiff`s oil by a Panamanian court excused the defendant`s obligation to operate under a contract for the transport and storage of oil. In this case, the force majeure clause expressly releases the defendant from its obligations in the event that performance has been prevented by “an embargo or state intervention or other similar or dissimilar events or circumstances”. [10] Contractual remedies against force majeure generally include an extension of the time limit for the performance of these obligations or the suspension of the performance of the contract for the duration of the force majeure event. If the force majeure event extends over a longer period, certain provisions may allow the parties to terminate the contract. According to the common law, a contract is frustrated when a global event occurs that so fundamentally affects the performance of the contract that it is automatically terminated and the parties are released from future performance of the contract. In the face of uncertain times of economic upheaval, the parties should constantly reassess the economic conditions of their contractual obligations and determine whether a breach is economically more efficient than performance. Such assessments should take into account the impact of the pandemic on the ability of the non-injured party to mitigate its losses, which may be taken into account when assessing whether and to what extent the non-injured party is entitled to damages.

The contract determines whether this is done for a certain period of time or indefinitely and what options exist for the parties. this may include the right of one or both parties to terminate the contract if the force majeure event persists for a certain period of time. . . .