Importance of the doctrines of frustration and force majeure in light of COVID-19

Abstract

The ongoing COVID-19 pandemic, and the measures to contain its spread, significantly impact contractual relationships in many ways. Unforeseen and uncontrollable events could be legitimate defences for being unable to execute obligations undertaken during better times. This article discusses two such defences in detail — frustration and force majeure — as applicable in Australia in the context of COVID-19. This article contends that while frustration and force majeure provide two possible defences for non-performance, the outcome will vary based on the circumstances of each case. Whether it is the application of the principles of frustration or force majeure, it is important to consider the commercial efficacy when applying these principles to contractual parties.