Effects on contracts
Following the coronavirus outbreak, the concept of frustration
and contractually agreed force majeure clauses may become
relevant in the event that the performance of a contract is
affected.
Section 56(2) of the Contract Law provides that a contract to do
an act which, after the contract is made, becomes impossible, or by
reason of some event which the promisor could not prevent,
unlawful, become voids when the act becomes impossible or unlawful.
Although Section 56 differs from common law to a large extent, it
was held that the spirit of the English authorities should be
followed and that Section 56(2) applies only to an impossibility
which destroys the foundation of a contract (see Cyprus Prus
Cinema & Theatre Co Ltd v Christodoulos Karmiotis (1967) 1
CLR 42). Accordingly, the concept of frustration is strictly
applied. In general, just because performance is made harder, this
does not equal impossibility.
