Effect of Supervening Events on the Performance of Contractual Obligations, Concept of Frustration and Force Majeure in Time Charterparties

Abstract

Subsequent to the formation of a charterparty, extraordinary events might occur. These events may radically and significantly alter the nature of the contractual rights and obligations of the parties. The aim of the study was to assess legal effects of such supervening events on the performance of contractual obligations. In particular, under English law, the contract may be automatically brought to an end by operation of the doctrine of frustration. Whereas, often, commercial parties reasonably contemplate change of circumstances at the time of the contracting and predetermine legal consequences for these events. This can be achieved through contractual risk allocation clauses, such as force majeure. Therefore, the study analyzed the effect of the contractual force majeure clauses and interrelation of these clauses with the frustration doctrine. The research concluded that by incorporating force majeure clauses, parties can: firstly, avoid the frustration of their contract if such clause fully covers the frustrating event; and secondly, parties can bring their contractual relations to an end in circumstances, which by itself may not be sufficient to bring the doctrine of frustration into operation.