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ARTICLE · 16 SEPTEMBER 2020

Released from a contract: Is COVID-19 an excuse?

Ramsden Lawyers
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Discussion about 1st Queensland case that relied on frustration due to COVID as a basis for terminating a contract.

AustraliaCorporate/Commercial Law
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It is an issue which has never before been contemplated by the courts. Happy Lounge Pty Ltd v Choi & Lee Pty Ltd and Anor [2020] QDC 184 ('Happy Lounge') was the first case to consider whether parties could be released from a contract due to COVID-19. The case was brought before the District Court of Queensland on 15 June 2020 and after extensive deliberation before the Court, a decision was handed down on 13 August 2020.

The issue in contention was whether government orders related to the COVID-19 pandemic frustrated the contract. The contract was for the sale of a business operating as a lounge and bar. Prior to execution of the contract, COVID-19 was declared a public health emergency.

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