When events take a dramatic turn, parties may be left unable to perform their contractual obligations, or may find that their counterparty is unable or unwilling to perform. In such circumstances, a party may be able to rely on contractual provisions, such as a force majeure or material adverse change (MAC) clause, to suspend its contractual obligations or to avoid them altogether. Alternatively, a party may argue that the contract has been brought to an end automatically as a result of the doctrine of frustration.
The question of when a party can suspend or avoid performance due to an intervening event or change of circumstances has gained particular prominence in recent years, initially in anticipation of Brexit and more recently in light of the disruption caused by the Covid-19 pandemic.
In this seventh of our updated and relaunched series of contract disputes practical guides, Neil Blake, Julie Farley and Natasha Johnson consider when such rights or principles may be triggered, as well as some practical steps that contracting parties can take to protect their position.
We will be publishing further editions of the updated series of contract disputes practical guides in the coming months. In the meantime, the first six editions in our relaunched series, and the remaining editions from the original series, can be accessed from the home page for our contract disputes series (which is also linked under “our guides” in the top menu).