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FORCE MAJEURE AND THE DOCTRINE OF FRUSTRATION; THE COVID-19 EFFECT

FORCE MAJEURE AND THE DOCTRINE OF FRUSTRATION; THE COVID-19 EFFECT

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FORCE MAJEURE AND THE DOCTRINE OF FRUSTRATION; THE COVID-19 EFFECT

FORCE MAJEURE AND THE DOCTRINE OF FRUSTRATION;
THE COVID-19 EFFECT

G.O. SODIPO AND CO.
NEWSLETTER
March, 2020 Edition
On the 12th day of March 2020, the World Health Organization declared the Corona Virus
Disease (Covid-19) a global pandemic.1 As a result of the wide spread and rapid rate of
infection, as well as an increasing number of deaths, various emergency measures have been
put in place by local, national and even international organizations and authorities to
curtail/contain the outbreak. These measures have led to the lockdown and slowdown of many
sectors across the country and around the world. Covid-19 has no doubt triggered severe social
and economic consequences for individuals, corporate and governments across the world.
Most domestic and international contractual obligations have been frustrated and become
difficult and impossible to continue. This implies that contractual obligations of parties may be
delayed or may not be performed. Parties may seek to rely on force majeure clauses and/or the
doctrine of frustration so as to avoid liability for a breach of contract.
Force Majeure
Force Majeure is a common clause in contracts that essentially frees both parties from liability
or obligation when an extraordinary event or circumstance beyond the control of the parties,
such as a war, strike, riot, crime, epidemic or an event described by the legal term act of God
(hurricane, flood, earthquake, volcanic eruption, etc.), prevents one or both parties from
fulfilling their obligations under the contract. In practice, most force majeure clauses do not
excuse a party’s non-performance entirely, but only suspend it for the duration of the force
majeure.2
A party seeking to rely on force majeure, must prove that they have taken reasonable steps or
found alternative ways to perform, but the extraordinary event made it impossible for the
performance of the contract. It is important to note that, the performance becoming more
expensive or more difficult does not suffice.