Lloyd's Maritime and Commercial Law Quarterly
THE JURIDICAL BASIS OF FRUSTRATION REVISITED
Gerard McMeel *
The politically charged topic of Brexit provoked a thorough and insightful consideration of the doctrine of frustration of contracts, with careful consideration of its juridical basis. A major European Union institution had committed to a long-term lease of substantial London premises only a couple of years before the fateful referendum. The court determined that the common law’s resources for dealing with unexpected supervening events are an amalgam of doctrinal tools such as frustration of purpose and supervening illegality, and judicial techniques of interpretation and implication. This prompts reflection on the respective roles of general rules, and the careful analysis of particular contracts, for which English law is celebrated.
Introduction
The future is uncertain. As recently as 2015, the notion that the United Kingdom would cease to be a member of the European Union, whose predecessor bodies it had joined more than four decades earlier, was to many minds unthinkable. Nevertheless, following the Conservative Party’s obtaining an overall majority in the General Election of that year, the UK Parliament enacted the European Union Referendum Act 2015. The national referendum subsequently held on 23 June 2016 resulted in a victory for those who wished the UK to leave the European Union. Most commercial arrangements prior to that date were entered into on the basis that the status quo of UK membership of the EU would continue indefinitely. We now know—after much turmoil—that the result of the referendum was eventually implemented on 31 January 2020.
The law of contract has to be equipped for transactions which are intended to be of long-term duration, and have some resources for the bumps in the road ahead. The common law to date has principally had recourse to a very narrow doctrine of frustration in response to supervening events. But frustration is not the only tool. That most remarkable twentieth-century contract lawyer, the late Professor Atiyah, observed:1
“A large part of the law of contract is concerned with allocating the risks of untoward events between the parties, using this term in the broadest sense to include events or facts existing at the time when the contract is made, and events occurring only subsequently…. It is well-known that the ‘true’ basis of the doctrine of frustration has given rise to considerable academic controversy in which even the judiciary has shared…. But these controversies now appear to me to be largely, though not
* QC, Professor of Commercial Law, University of Manchester.
1. PS Atiyah, “Judicial Techniques in the Law of Contract”, in
Essays on Contract (1986; paperback edn, 1988) (“Atiyah,
Essays
”), 244.
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