Although we’d like to hope that every person who we ever make an agreement with will keep their promise, we believe it’s wishful thinking and the law recognizes this.
There are some instances under English contract law where a breach of contract will be excused – in part or wholly – depending on the circumstances.
Because this is an events blog, I am going to talk about the excuse which is most pertinent to event managers: Frustration of contract.
Although there are other excuses for non-performance under a contract, frustration of contract is the one which you’re most likely to come across in your day-to-day life as an event manager (Well, we’d like to hope it doesn’t happen in your day-to-day life, but you get what I mean…)
Frustration of Contract and Force Majeure
Frustration of contract and Force Majeure are two inter-linked concepts.
Frustration of contract occurs where, after a contract has been formed, an event occurs which renders any further performance impossible, illegal, or radically different from what was contemplated.
Illegal is the easiest to cover – As an example, you’re an international wholesaler and you trade across the globe. You’ve just sealed a huge contract with China and it’s all good to go. Suddenly, (heaven forbid!) war breaks out and it is illegal to trade with enemy states. China, in this fictional state of affairs, is an enemy state. Have you breached your contract? Yes. But there is no fault here because the contract has become illegal by virtue of circumstances outside of your control.
In order to determine frustration, the whole situation must be examined in light of the contractual terms. It must be determined entirely in context whether performance is indeed impossible, illegal, or fundamentally different from that anticipated by the parties.
Parties can make express provision for frustration of contract and these are called force majeure clauses. Literally translated as “superior force”, these kinds of clauses cover war, strike, riots, or acts of god.
Acts of god are defined in the English case of Transco Plc v Stockport Metropolitan Council as events which involve no human agency, are not possible to guard against, due directly and exclusively to natural causes, and which could not have been prevented by any amount of foresight, planning, or care.
Examples of Frustration of Contract
Destruction of the Subject Matter
In the event that the subject matter of a contract of destroyed, the contract will be frustrated and frustration of contract can be used as an excuse for non-performance.
For example, you have organized a wedding and the client specifically requests the wedding takes play in a particular building. After the formation of the contract, the building burns down through the fault of no party to the contract. This contract is frustrated and there is a valid excuse under frustration of contract for breach.
As mentioned above, illegality can make a fully formed contract frustrated.
Another example, you’ve planned a grand feast. You intend to serve the rare and delicious speckled pheasant (I wouldn’t check the facts too much on this story…) and you sell tickets to 100 guests expecting to receive a rare and exclusive meal.
Before the event, the speckled pheasant is declared an endangered species and can no longer be hunted or served for food. It is illegal to do so.
This would be supervening illegality and would be an excuse not to host the party.
Incapacity or Death
I’m sure that this example speaks for itself – You’ve organized an event and you’ve arranged for a famous pianist to lull your event guests with their melodies!
Unfortunately, the pianist dies (or becomes too ill to perform) before the event. Due to the incapacity or death, which is no fault of either party, the contract is frustrated and non-performance is excuses.
When drafting contracts, it’s important to expect and draft for the unexpected. The old saying “If it can go wrong, it will go wrong” is what I believe is most pertinent to the doctrine of frustration.
If you’re planning an outside event – make sure you put in place contractual terms which limit your liability in the event of failure to deliver to outside influences – be creative!
Points to take away
1. Frustration of contract and Force Majeure are two inter-linked concepts.
2. Frustration of contract occurs where, after a contract has been formed, an event occurs which renders any further performance impossible, illegal, or radically different from what was contemplated.
3. It must be determined entirely in context whether performance is indeed impossible, illegal, or fundamentally different from that anticipated by the parties.
4. Force majeure clauses, literally translated as “superior force”, cover war, strike, riots, or acts of god.
5. Be creative when limiting your liability – if it can go wrong, it will go wrong!
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