Force Majeure, Supervening Impossibility & Frustration of Contract in light of COVID-19

Abstract

The unprecedented upheaval caused by COVID-19 has affected the normal performance of contractual duties. Operational issues, health and safety rules, and government imposed stringent ‘lock-downs’ for extended periods of time have restricted life and commercial activity on an unparalleled scale. A post COVID world is afflicted by delays, non payment, defaults and a failure to comply with contractual obligations. In these circumstances, contracted parties are eager to learn their legal rights and remedies when the performance of a contract becomes impossible. There are many inquiries as to whether contracted parties are legally excused from discharging their contractual obligations under the doctrines of force majeure, supervening impossibility or frustration. Force majeure is a contractual agreement incorporated in contracts and frustration is an English contract law doctrine that acts as a device to discard contracts where an unforeseen event renders contractual obligations impossible. The doctrine of Supervening impossibility means events that render the performance of the contract impossible to perform, consequently resulting in the termination of contracts. The purpose of this article is to identify applicable laws surrounding such force majeure and/or supervening impossibility and/or frustration events, in the context of a public health crisis, in an effort to assist Sri Lankan business moving forward. This article also focuses on possible avenues of redress when a contract becomes impossible to perform.