Legal Frustration

There is a English legal doctrine called frustration. It acts to bring a contract prospectively to an end because of the effect of a supervening event ie it ends the contract early. It requires the law to recognise that:

  • without default of either party
  • a contractual duty is now impossible to perform because
  • new circumstances would make that duty
  • radically different from the original promise under the contract.

It is a permitted escape route to avoid literal enforcement of an absolute promise where that promise is now impossible or impractical and where enforcement would be unfair and unreasonable.

The most recent case related to whether the European Medical Agency could avoid the remaining term on its lease in Canary Wharf on the basis that Brexit had frustrated the lease making it illegal (in the sense of against their internal governance) or undermining the common purpose of the lease.

The court refused to allow the parties to rely on legal frustration, despite the emotional frustration that Brexit is causing.

Contract Frustration

As well as the legal concept of frustration, which is a little tricky to grasp, I think everyone can grasp the idea of contract frustration ie the jargon, poor structure, limited use of visuals, complicated language, long texts, huge investment, unclear risks and time pressures which create the ‘perfect recipe for feelings like frustration and anxiety‘.

The similarities are:

  • the contract as drafted is radically different from what the parties expected
  • the contract may be impossible or impractical to perform
  • new wording has intervened in the transaction.

Unlike legal frustration, the cause of this unpleasantness is not unforeseeable or unforeseen – it is the result of the acts or omissions of the contract writers. They have taken the transaction and gussied it up into something unrecognisable!

Milene’s story about contracts will feel very familiar and is based on her experiences in Brazil. As Milene admits if the contract is complex, if contractual negotiation is time consuming, if it causes stress, anxiety and even frustration, for how long do you think users will be quiet and will simply accept, comforting themselves by saying that things are as they are?

Milene Amoriello Spolador is a tax and business lawyer and also part of the Legal Creatives Academy. But she might as well be talking about construction contracts in England!

Why do so many clients believe that lawyers only bring stress and negative experiences to the contract preparation stage? If clients are signing a clear contract that precisely meets their expectations, values and needs, those lawyers would be welcomed with open arms and celebrated.

Instead they are too often shunned as an expensive dispensible luxury!

What should you do?

If you write contracts, then focus on creating documents which meet the user needs – even if they don’t feel perfectly watertight (read my view on the myth of watertight contracts).

If you are a client whose lawyer does not create contracts that you love, find another solution or another lawyer!

Reference: Canary Wharf v EMA [2019] EWHC 335 (Ch)

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