Force Majeure: Additional Legal Doctrines For Stopping Performance Under A Contract – Corporate/Commercial Law

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Force Majeure: Additional Legal Doctrines For Stopping Performance Under A Contract


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Part 1 and Part 2 of this article series focused on the
suspension of contractual performance due to events of force
majeure. Under common law, there are 2 additional doctrines that
can stop performance under a contract and can be used to terminate
the contract: the doctrine of “frustration” and the
doctrine of “impracticability”. These are separate
doctrines from force majeure. If a contract contains a force
majeure provision, the force majeure provision (not the doctrine of
frustration/impracticability) would be invoked. But if a party
fails to make a claim under force majeure, they can attempt to make
a claim under the defenses of frustration / impracticability.

In the US, force majeure, frustration and impracticability are
related, but legally distinct concepts (Drummond Coal Sales, Inc.
vs. Norfolk Southern Railway Company, Civil Action No. 7:16cv00489
(2018 WL 4008993) (U.S. District Court, Western District of
Virginia). Frustration and impracticability excuse performance and
allow for the termination of the contract. In contrast, a force
majeure clause may often focus only on the “suspension of
performance” not the “termination” of the
contract, depending on the language of the clause.

For the doctrine of frustration/impracticability to be used, a
party would stop performing its contractual obligations. It would
claim the performance of the contract is frustrated or
impracticable so its performance should be excused. If the other
party didn’t agree, that party would sue in court for breach
of the contract and for damages, as the other party stopped
performing. The non-performing party would claim a defense of
frustration/impracticability before the courts.

As with force majeure, it would be up to the court to decide if
performance of the contract was frustrated/impractical. The
applicability of these doctrines is determined by a court. The
doctrine of frustration would apply if there is a significant
change of circumstances arising from a supervening, unforeseeable
event that makes the performance of the contract fundamentally
different from what was contemplated by the parties or makes it
impossible to fulfil. A party’s principal purpose under the
contract is frustrated (for example, the contract depends on the
services of a particular person and that person dies). In such a
case, the parties could no longer be bound to perform their
obligations and the contract is terminated. Under the doctrine of
“impracticability” if a party’s performance is
impracticable due to the occurrence of an event that was not that
party’s fault (and the non-occurrence of the event was a
basic assumption on which the contract was made), then the duty to
be performed can be discharged (Drummond Coal Sales, Inc. vs.
Norfolk Southern Railway Company, Civil Action No. 7:16cv00489
(2018 WL 4008993) (U.S. District Court, Western District of
Virginia).

If the court decided that performance was NOT
frustrated/impracticable, then the non-performing party would be in
breach of the contract and liable for damages. If the court decided
performance was frustrated/impracticable, performance would be
excused, and the contract terminated.

Originally published April 3, 2020

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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