Lloyd's Maritime and Commercial Law Quarterly

Covid, contracts and change of circumstances*

Ewan McKendrick *

This article examines the implications of the Covid-19 pandemic for the law of contract, in particular the response of the law to a change of circumstances which occurs after the contract was concluded. While the pandemic has not, as yet, resulted in any judicial re-consideration of the scope of the doctrine of frustration, reliance has been placed on non-binding guidance and legislation has been enacted on a time-limited basis to resolve problems caused by the pandemic which in other legal systems would be dealt with by the application of standard rules of the law of contract. Drawing on these examples and taking account of developments in the Netherlands, the article concludes by asking the question whether the doctrine of frustration, as it currently stands in English law, is in need of reform.
National and international crises can and do raise questions which pose new challenges for private law. They may also require judicial reconsideration of long-established private law doctrines. The most significant such crisis in recent times has been the Covid-19 pandemic and in this paper my aim is to consider the implications of the pandemic for the law of contract, in particular that part of the law of contract which is concerned with the impact of a change of circumstances occurring after the date of entry into the contract on the contractual obligations of the parties, an issue which is dealt with in English law principally by the doctrine of frustration.
It may be objected that, thus far, there have been no cases of real significance arising out of the pandemic which suggest that the doctrine of frustration requires reconsideration or that it is not fit for purpose. To the extent that there has been case law, it is typically at first instance and the outcome has been the application of long-established rules to the facts, without any suggestion that the law is in need of fundamental reform. While it is correct to say that, so far, there has been no judicial reconsideration of the doctrine of frustration, it is important to note that no case has, as yet, reached the Supreme Court and it is only at the level of the Supreme Court that significant change can be made. Thus, we cannot rule out the possibility that, were a suitable case to arise, the Supreme Court might be asked to reconsider the scope of the doctrine of frustration.
It is, however, also important to note developments which have taken place outside the formal doctrines of the law of contract, in particular exhortations issued on behalf

Covid, contracts and change of circumstances


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