Q&A - What happens if I cannot fulfil contracts due to COVID-19 restrictions?

Q:    I am a small contractor with a whole string of jobs I have been unable to carry out due to coronavirus lockdowns and out-of-stock materials. I cannot give customers a date when they might get their jobs done and the further behind I get, the more likely it is that I will have to pull out of some contracts completely because I won’t ever catch up. Where do I stand regarding my contractual liabilities?

A:    You are not alone in experiencing contractual problems during the COVID-19 crisis, and it is not just about contractors’ liabilities to customers, customers are also breaking contracts due to redundancy, health issues etc.

In the normal world in which we lived prior to the coronavirus pandemic, under English and Welsh law a contract was a contract, irrespective of circumstances, and if that contract was breached then those liable for breaching it were also breaking the law. However, there have always been two exceptions to that rule, namely contracts that are breached due to force majeure or frustration.

‘Force majeure’ is when a party is prevented from fulfilling a contract due to circumstances beyond their control, and whilst you might argue that the COVID pandemic was beyond your control a ‘force majeure clause must have been included in the contract. A contract ended on the grounds of ‘Frustration’ is one that has ended due to an unpredictable event. The big difference between force majeure and frustration is that frustration does not rely on a relative clause being written into the contract. You should seek legal advice as soon as possible to establish whether either of these apply to your particular contracts.

Due to the unforeseen COVID pandemic we are currently advising a great many businesses, both in respect of updating contractual clauses and about how their existing contractual obligations could be impacted.

Article 23/11/2020

This question has been answered by James Denton, a Solicitor with GHP Legal.  If you would like to speak to someone about this or any other legal matter it is still possible and we are doing everything we can to ensure that we continue to offer our high levels of service to our clients.  In accordance with government guidelines, most of our lawyers are currently working remotely which means you may not now receive a response as promptly as you may expect. Please kindly bear with us and we will respond as soon as we are able.

Where possible, we ask that you communicate with us by phone or email. If you have a new enquiry, please use the ‘Contact us’ form on the website or call Oswestry 01691 659194 or Wrexham 01978 291456. As a firm, you will appreciate that we are still extremely busy, and whilst our colleagues are well equipped to work remotely, due to current circumstances work may be interrupted – however cases are still ongoing and will be prioritised by urgency and need. Stay safe and thank you for your support.

James Denton

James Denton

Solicitor

Solicitor in our Civil Litigation and Conveyancing departments in our Oswestry & Wrexham office.

Robert Williams

Robert Williams

Partner

Partner and Head of the Civil Litigation, Personal Injury and Dispute Resolution team in Wrexham