COVID-19: IS THERE A DIFFERENCE BETWEEN "FORCE MAJEURE" AND FRUSTRATION? - Welcome to Lumenar's blog

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Tuesday, 21 April 2020

COVID-19: IS THERE A DIFFERENCE BETWEEN "FORCE MAJEURE" AND FRUSTRATION?


Generally, you know that liability for non-performance of a contractual obligation is strict except under special circumstances. This is the principle established in the age-long case of Paradine v. Jane (1647), "when the party by his own contract created a duty or charge upon himself, he is bound to make it good, if he may, notwithstanding any accident by inevitable necessity because he might have provided against it by his contract".

Force Majeure is a French law doctrine which has the ability to relieve a party from responsibility from non-performance in certain circumstances. By virtue of Art. 1148 of the French Civil Code, "there is no place for any damage when as a result of force Majeure, the debtor has been prevented from conveying or doing that to which he was obliged or has done what was forbidden to him". For the defense of force Majeure to avail a party, such a party must show that performance has been made impossible and not merely more difficult. The event preventing performance must have been unforseeable and irresistible. Force Majeure is otherwise referred to as "cas fortuit". This principle is widely recognized in common law countries due to frequent use.

Frustration on the other hand, is a common law doctrine. It caters for circumstances where parties have forseen a risk but have made no provision for it in the contract then the loss is intended to lie where it falls. The party cannot invoke the doctrine of Frustration where there is an alternative method of performance or where the obstacle to performance might have been removed. In the case of Wema Bank v. Sola Oloko CA/1/88/2009 (2014) NGCA 3, the court noted that that frustration is the premature determination of a legal agreement between two parties. The court went further to uphold the principle in the locus classicus case of Taylor v. Caldell.

So, YES, there is a difference between "force Majeure" and "Frustration".  In the case of "force Majeure", the intervening event was unforseeable while in "Frustration", the intervening event was forseeable but NOT provided for. Furthermore, the event for which you seek to invoke the "force Majeure" clause must be expressly covered in the clause. This means that if you did not include, "epidemics" or  "pandemics'" or both in your "Force Majeure" clause, you cannot  plead force Majeure as a defence to inability to perform your contractual obligation as a result of Covid-19. The defense of frustration can be implied and the effect is termination of contractual agreement and obligations. 

Due to the outbreak of Covid-19, many contracts have been affected. The party in breach can plead "force Majeure" provided Covid-19 is expressly covered in the clause. If not, the defense of frustration is the most appropriate defense to plead especially in common law jurisdictions. Meanwhile, both parties are expected to show good faith by taking steps to mitigate losses. 


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