Is your contract crisis ready? Force majeure, frustration and termination for convenience
From global supply chains to small town purchase orders – a huge number of contractual arrangements are being disrupted by recent natural events. With the COVID-19 outbreak now declared a pandemic by the World Health Organisation (WHO) and the climate emergency intensifying, entities are looking at their contracts to see if they are ‘crisis ready.’
As a result, force majeure, frustration and termination for convenience clauses have been brought into the spotlight, as entities consider what relief is available to them where they are unable to perform their contractual obligations due to the impacts of the recent bushfires, floods and global COVID-19 emergency.
A force majeure (literally ‘superior force’) clause allows one or both contractual parties to cease or suspend performance of a contract following the occurrence of a pre-defined event.
If successful, the party will not be liable for failing to perform its obligations under the contract. It may also give rise to termination right, usually where the force majeure event continues for an extended period.
In most cases, a force majeure event includes acts of God, war, riot or invasion, national emergency, government action including strikes, terrorism or the imposition of embargo, or extreme weather events – which could include bushfires or severe flooding. The clause may also specifically include epidemics or pandemics, which would now include COVID-19 as a WHO declared pandemic.
However, changes in economic circumstances are usually commonly excluded, meaning delays or stoppages due to disrupted global supply chains as a fallout of a natural event, rather than a direct cause, may be excluded.
Ultimately, it will depend on the drafting of the particular clause, and entities should be examining their suite of contracts to determine the scope of their force majeure clauses.
The common law doctrine of frustration may, in extreme cases, be able to be relied on where there is no force majeure clause, or where the crisis event does not fall within the definition of a force majeure under a particular contract.
Frustration requires the impossibility of a contract’s performance, or the obligations under the contract being so fundamentally changed, by an unforeseen event from what was originally contemplated by the parties.
However, frustration is not easy to establish, as it requires the parties to prove that they did not contemplate performing the contract in the radically altered circumstances.
Performance of a contract becoming more expensive or onerous, even through no fault of the parties, will generally not be enough to establish frustration.
Termination for convenience
A party may have a right to unilaterally vary a contract, suspend the performance of a contract in certain circumstances, or be able to rely on a termination for convenience clause.
Commonly included in government contracts, termination for convenience clauses allow the party with the benefit of the clause to terminate the agreement where there is no fault by the other party.
These clauses usually provide that the terminating party may, at any time by providing notice to the other party, terminate the agreement in whole or in part. If triggered, the terminating party will usually only be liable for direct costs incurred by the other party up to the date of termination, and not loss of profits.
In a government context, termination for convenience clauses are usually justified where the government can no longer fulfil its contractual obligations due to a significant or urgent change of government policy – as is being currently experienced with the ramifications of the COVID-19 emergency.
Finally, if the contract is international, with parties across jurisdictions, parties should also be looking to the governing law clause.
This is especially important where the contract does not have a force majeure clause, as certain jurisdictions imply force majeure into the contract where it lacks an express term.
Under Australian law, force majeure clauses will generally not be implied where there is no express clause, however this is not necessarily the case for other jurisdictions, such as China.
The recent crises in Australia, and across the globe, have sparked concern for contracting parties regarding what they can do if they can no longer perform their obligations under the contract.
In most circumstances, this will depend on the wording of the contract itself, and whether the crisis in question satisfies a force majeure or suspension event, or whether a party has a right to terminate the contract for convenience.
Failing that, parties may seek to rely on the common law doctrine of frustration in extreme circumstances, although it is often difficult to establish the ‘impossibility’ required.
Authors: Scott Alden & Victoria Gordon
AFP disclosure regarding ACT Policing’s access to telecommunications data
The Commonwealth Ombudsman, acknowledges the AFP’s announcement today of compliance issues it has identified affecting ACT Policing’s handling of requests for certain types of telecommunications data. The Ombudsman has made suggestions to the AFP to ensure that it comprehensively examines the extent to which specific legislative provisions in force at the relevant times were breached, and their implications (11 March 2020). More...
New Resource to teach school children about digital health records
Schools are being given the opportunity to teach students about their rights in managing their digital health records, using a new resource designed by the National Children’s Commissioner. Under the My Health Record system, children aged 14 years and over can manage their own records. They may do so independently, or they can grant access to parents or guardians (11 March 2020). More...
Katherine gets $92.5 million from class action settlement
Katherine residents will receive $92.5 million as a result of the successful class action against the Federal Government on PFAS contamination. Documents released by the Federal Court of Australia show Katherine is set the receive the biggest chunk of the $212.5 million which was agreed on late last month (11 March 2020). More...
Commissioner launches Federal Court action against Facebook
The Australian Information Commissioner has lodged proceedings against Facebook in the Federal Court, alleging the social media platform has committed serious and/or repeated interferences with privacy in contravention of Australian privacy law (09 March 2020). More...
Report on foreign influence released
Secretary of the Attorney-General’s Department, Chris Moraitis said that in the first 12 months since the Scheme was introduced in December 2018, no referrals for investigation or prosecutions had been made, but played an important role in supporting the integrity of Australia’s Federal election on 18 May 2019 (09 March 2020). More...
Committee to examine impact of litigation funding on justice outcomes
A parliamentary committee will be asked to examine the extraordinary profits being made by the booming litigation funding industry to determine whether Australians are receiving their fair share of class action settlements (05 March 2020). More...
Sex Discrimination Commissioner launches Respect@Work report of the National Inquiry into Sexual Harassment in Australian Workplaces
Sex Discrimination Commissioner has today launched Respect@Work, the Australian Human Rights Commission’s report of the National Inquiry into Sexual Harassment in Australian Workplaces 2020. Through a package of 55 recommendations, Respect@Work proposes a new approach for government, employers and the community to better prevent and respond to sexual harassment in the workplace (05 March 2020). More...
APS complaints handling probed
The Commonwealth Ombudsman has released a report (Lessons in good complaint handling) of his enquiry into complaints handling in the Australian Public Service (APS). The report has highlighted some of the areas for improvement we identified across the three agencies in the 2019 (05 March 2020). More...
Overturning previous child abuse settlements
Have your say on potential reforms to empower NSW courts to set aside unjust settlement agreements between child abuse survivors and responsible institutions – that’s the call from Attorney General Mark Speakman today (04 March 2020). More...
Inquiries into Alinta Energy
The Office of the Australian Information Commissioner (OAIC) is making preliminary inquiries into Alinta Energy’s handling of Australians’ personal information (03 March 2020). More...
Protecting emergency workers from Harm
It will be even harder for people who assault emergency workers to use “special reasons” to avoid a jail term under new laws introduced into Parliament. The Sentencing Amendment (Emergency Worker Harm) Bill 2020 will require courts to impose a sentence of imprisonment in all cases where an offender recklessly or intentionally injures an emergency worker on duty (03 March 2020). More...
Emails blamed for data breaches
The Office of the Australian Information Commissioner (OAIC) has announced that almost one in three data breaches in Australia have been linked to compromised login credentials, in her latest report Notifiable Data Breaches (NDB) Report (02 March 2020). More...
The principles of open justice must be protected, says the Law Council
The Law Council believes that the INSLM review of the operation and provisions of the NSI Act relating to Witness J will ensure that the suppression of disclosure or publication of judgments, convictions, sentences and sentencing remarks is confined to the most exceptional cases (04 March 2020). More...
Law Council of Australia President, Pauline Wright, statement regarding biosecurity control orders
Powers under the Biosecurity Act 2015 (Cth) are extraordinary and must be approached with the utmost caution and should only be used as a last resort. The exceptional powers under the Act do not have the types of safeguards and independent oversight protections afforded to our law enforcement and security agencies’ exercise of coercive powers (03 March 2020). More...
COAG Meeting Communiqué, 13 March 2020
The Council of Australian Governments (COAG) held its 48th general meeting today in Sydney. The discussion focussed on Australia’s response to coronavirus (also known as COVID-19) and on recovery from the 2019-20 bushfires. Leaders also made progress on a range of existing COAG priorities, directed at improving the current and future wellbeing of Australians. More...
Coronavirus (COVID-19) precautions at Courts and Tribunals
The Federal Court of Australia, the Family Court of Australia and the Federal Circuit Court have this week issued notices directed at minimising the spread of the virus in the community (March 2020).
The AAT Bulletin is a weekly publication containing a list of recent AAT decisions and information relating to appeals against AAT decisions. Issue No. 9/2020, (9 March 2020). More...
Law Council of Australia Submissions
02 March 2020— Law Council
Council of Attorneys-General – Age of Criminal Responsibility Working Group Review
02 March 2020— Law Council
Model Operating Requirements & Model Participation Rules: Consultation Drafts Version 6
Legal Services Council newsletter - Issue 1
Click here to view issue 1 for 2020 of the Legal Services Council newsletter.
ANAO Performance Audits in Progress
Due to table: June, 2020; Open for contribution
Administration of financial disclosure requirements under the Commonwealth Electoral Act
Due to table: June, 2020 Open for contribution
Management of the Australian Government's Register of Lobbyists — follow-up
Voluntary Code of Practice Securing the Internet of Things for Consumers — submission to the Department of Home Affairs (06 March 2020)
Legal and Constitutional Affairs References Committee
Impact of changes to service delivery models on the administration and running of Government programs
Nationhood, national identity and democracy
Legal and Constitutional Affairs Legislation Committee
Federal Circuit and Family Court of Australia Bill 2019 [Provisions] and Federal Circuit and Family Court of Australia (Consequential Amendments and Transitional Provisions) Bill 2019 [Provisions]
Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2019
COVID-19 Procedural changes at the Sydney District Court
The Chief Judge of the District Court has today issued a note regarding procedural changes in response to concerns about the spread of coronavirus, commencing Wednesday 18 March 2020.
Supreme Court - Coronavirus update
The Chief Justice has issued updated information relating to procedural changes in light of the latest Coronavirus recommendations. The changes will take effect from Monday 23 March. Click here.
BOSCAR: NSW Recorded Crime Statistics quarterly update December 2019
The offences trending upward were domestic violence related assault (up 5.0%), and steal from retail store (up 8.3%). The offence trending down was steal from person (down 7.1%) (04 March 2020). More...
IPC NSW: Contract register requirements and the GIPA Act by the NSW Information Commissioner
The Government Information (Public Access) Act 2009 (GIPA Act) requires that contract information is made publicly available by government agencies through a publicly available contract register (12 March 2020). More...
Setting aside settlement agreements for past child abuse
The NSW Government is seeking submissions on potential reforms to allow NSW courts to set aside historical settlement agreements for child abuse. Submissions close on 15 April 2020
NSW DCJ: Update to child protection reporting
From 1 March 2020 amendments to the Children and Young Persons (Care and Protection) Act 1998 (Care Act) will commence to expand mandatory reporting groups and provide greater protections for reporters. More...
Australian government procurement contract reporting update
Australian National Audit Office: 11 March 2020
This information report seeks to provide greater transparency on procurement activity in the Australian public sector. The report is presented in a variety of ways, including tables and figures, publicly available data from public sector procurement activity recorded in AusTender. More...
More news is good news: the case against restricting broadcast journalism
Gideon Rozner; Institute of Public Affairs: 09 March 2020
In light of the issues presented by ACMA’s inquiry and the debate around news and the media more broadly, the Institute of Public Affairs has released this research report, which outlines the case against further regulation of broadcasting, as well as several recommendations on the way in which policy-makers can create a stronger news landscape. More...
Gender inequality in Australia’s labour market: a factbook
Alison Pennington, Jim Stanford; Centre for Future Work: 06 March 2020
This publication outlines evidence on over 60 different statistical indicators of gender inequality in Australia, organised into 18 different subject groupings. It paints a composite picture of how women are blocked from full participation in work and economic activity, experience greater precarity in employment, are paid less for their efforts, and experience other forms of exploitation. More...
A fair and responsive public service for all
Peter Bridgman; Government of Queensland: 04 March 2020
This report finalises an intensive review of public sector employment laws in Queensland and recommends changes that include different language and concepts about how and why people work for the State Government in its various guises. More...
Report to the Australian Senate on anti-competitive and other practices by health insurers and providers in relation to private health insurance
Australian Competition and Consumer Commission: 04 March 2020
This report analyses key competition and consumer developments and trends in the private health insurance industry between 1 July 2018 and 30 June 2019, including ACCC enforcement and other actions relating to the health sector. More...
Back to basics: professional conduct in and with the Courts
Speech delivered at judicial CLE session, Cairns, 19 February 2020
Professional integrity is essential for making a good impression. This is especially true for the courtroom advocate and attendees. More...
The identity theft response system
Megan Wyre, David Lacey and Kathy Allan, (2020) AIC, Trends and Issues in Crime and Criminal Justice (No. 592)
Identity theft continues to grow in prevalence and complexity. Despite this growth, little is known about the identity theft response system and how it assists victims to recover. This study examines the response system by analysing 211 identity theft cases reported to IDCARE, a national identity and cybercrime victim support service. More...
Whiteoak v State Parole Authority and the Attorney-General of NSW  NSWSC 185
Administrative Law – Judicial Review – Statutory construction – Plaintiff previously convicted of murder and sentenced to life imprisonment – Sentence subsequently re-determined so as to incorporate a non-parole period – Where non-parole period expired and plaintiff sought release on parole – Plaintiff a citizen of the United Kingdom who had never applied for Australian citizenship – Where plaintiff’s visa had been cancelled and plaintiff was liable to immediate deportation to the United Kingdom upon release – Evidence before the Authority to support the conclusion that the plaintiff required assistance to reintegrate into the community and address the risk of reoffending – No means available for any supervision of the plaintiff if he left Australia – Where the State Parole Authority refused the plaintiff’s application for release on parole – Whether the Authority erred in taking into account the fact of the plaintiff's inevitable deportation – Whether the Authority erred in concluding that the interests of the safety of the community extended to the community in the United Kingdom to which the plaintiff proposed to relocate upon release and deportation Words and Phrases – “community" – “general community” – “interests of the safety of the community"
Attorney General for New South Wales v Melco Resorts & Entertainment Limited  NSWCA 40
COMMISSIONS OF INQUIRY – inquiry established under Casino Control Act 1992 (NSW) – whether conferral of powers and authorities of a commissioner under the Royal Commissions Act 1923 (NSW) included power to compel testimony or production of documents irrespective of claim of legal professional privilege – meaning of s 143A of Casino Control Act – whether a witness summoned by or appearing before the person presiding at an inquiry entitled to claim legal professional privilege.
PRIVILEGE – legal professional privilege – whether s 143A of Casino Control Act operated to abrogate legal professional privilege – whether s 143A of Casino Control Act conferred power to compel production of documents irrespective of legal professional privilege.
STATUTORY INTERPRETATION – whether s 17(1) of the Royal Commissions Act conferred a power or authority on a commissioner – whether s 143A of the Casino Control Act picked up s 17(1) of the Royal Commissions Act and abrogated legal professional privilege – principle of legality – legislation to be construed in context of case law existing at time of enactment – meaning of “protection” afforded to a witness in s 11(3) of Royal Commissions Act – permissible use of extrinsic materials.
Webb v Port Stephens Council; Webb v Port Stephens Council; Port Stephens Council v Webb  NSWCATAD 81
GIPA Act applications – application for review and referral for contempt based on non-compliance of orders of Tribunal - held both applications dismissed because they lacked substance and were vexatious. GIPA Act application for restraint order under section 110 – held conduct of person making applications justified the making of a restraint order-order made. Costs reserved
Lawson v Minister for Environment and Water  NSWSC 186
STATUTORY INTERPRETATION – Legislative purpose – whether land vested in South Australia for an estate in fee simple under s 18 River Murray Waters Act 1915 (NSW) on commencement of that Act on 31 January 1917 – whether, as a consequence of the vesting, any and all interests in the land acquired through adverse possession or held as native title rights were extinguished upon commencement of the Act – was the vesting of the land by the Act a “previous exclusive possession act” for the purposes of s 23B of the Native Title Act 1993 (Cth) and s 20 of the Native Title (New South Wales) Act 1994 (NSW)
PROCEDURE – separate questions for determination
Mashayekhi v Legal Aid NSW  NSWCATAD 78
JURISDICTION – administrative review – legal aid - relevance of issues raised by the Applicant – enabling legislation – basis of Tribunal’s jurisdiction.
Tanious v NSW Land and Housing Corporation  NSWCA 35
APPEALS – leave to appeal under Supreme Court Act 1970 (NSW) s 101(2)(r) - appeal against primary judge’s refusal to grant leave to appeal against decision of NSW Civil and Administrative Tribunal – primary judge refused leave for failure to identify questions of law on appeal as required by Civil and Administrative Tribunal Act 2013 (NSW) s 83(1) – no error in primary judge’s reasons for refusing leave – application for leave to appeal dismissed
Jankovic v Director of Public Prosecutions  NSWCA 31
CRIME – offences against police in execution of duty – whether police in execution of duty when alleged offences committed – accused arrested without warrant – whether arrest lawful – whether there was evidence on which the court could find, as required by s 99(1)(b) of the Law Enforcement (Powers and Responsibilities) Act 2002 (NSW), that the arresting officer was “satisfied” that arrest without warrant was “reasonably necessary” for a reason stated in that section – meaning of “reasonably necessary” – need for police officer to engage in a process of comparison and to make an evaluative judgment regarding proportionate response to risk. ADMINISTRATIVE LAW – judicial review of decision of the District Court dismissing appeal from the Local Court against conviction – review not available unless jurisdictional error established – where function of the District Court was to conduct appeal by way of rehearing “on the basis of” the evidence in the Local Court – where the District Court made a central finding of fact for which there was no basis in the Local Court evidence – whether error of law – whether jurisdictional error. ADMINISTRATIVE LAW – judicial review of decision of the District Court refusing to submit a question for determination by the Court of Criminal Appeal – whether refusal on erroneous basis that the question was obviously baseless was constructive refusal to exercise jurisdiction – whether jurisdictional error.
Forbidden Foods Pty Ltd v Rice Marketing Board for the State of NSW (No 2)  NSWCATAD 73
GOVERNMENT INFORMATION – access application – whether overriding public interest against disclosure – publication of reasons – disclosure to intervenor
Betzis v Commissioner of Police  NSWCATAD 71
ADMINISTRATIVE LAW – administrative review - Government Information – refusal to deal with application – whether information is available to applicant under subpoena or other order of a court – exercise of discretion to refuse to deal ADMINISTRATIVE LAW – administrative review - Government Information – excluded information – whether information relates to judicial functions of coroner ADMINISTRATIVE LAW – administrative review - Government Information – balancing the public interest
Telecommunications Legislation Amendment (International Production Orders) Bill 2020
Amends the Telecommunications (Interception and Access) Act 1979 to: provide a framework for Australian agencies to obtain independently-authorised international production orders for interception, stored communications and telecommunications data directly to designated communications providers in foreign countries with which Australia has a designated international agreement; make amendments contingent on the commencement of the proposed Federal Circuit and Family Court of Australia Act 2020; and remove the ability for nominated Administrative Appeals Tribunal members to issue certain warrants. Also amends: six Acts to make consequential amendments; and the Surveillance Devices Act 2004 to correct a drafting error.
House of Representatives 05 March 2020
National Integrity Commission Bill 2019
The bill: establishes the Australian National Integrity Commission as an independent public sector anti-corruption commission for the Commonwealth; provides for the appointment, functions and powers of the National Integrity Commissioner and commissioners; and makes consequential amendments to the Law Enforcement Integrity Commissioner Act 2006, Ombudsman Act 1976 and Public Interest Disclosure Act 2013.
House of Representatives. Removed from the Notice Paper in accordance with (SO 42) 03 March 2020
Telecommunications (Emergency Call Service) Amendment Determination 2020 (No. 1)
06/03/2020 - This instrument amends the Telecommunications (Emergency Call Service) Determination 2019 which imposes requirements on carriers, CSPs and the ECPs in relation to emergency call services.
Remuneration Tribunal Amendment Determination (No. 1) 2020
04/03/2020 - This determination amends the Remuneration Tribunal (Remuneration and Allowances for Holders of Full time Public Office) Determination 2019 and the Remuneration Tribunal (Remuneration and Allowances for Holders of Part time Public Office) Determination 2019.
Proclamations commencing Acts
Better Regulation Legislation Amendment Act 2019 No 23 (2020-85) — published LW 13 March 2020
Proclamation is to commence an amendment to the Residential Tenancies Act 2010 that excludes the application of that Act to certain short-term rental accommodation arrangements unless the person given the right to occupy the premises under the arrangement
Fair Trading Amendment (Short-term Rental Accommodation) Act 2018 No 41 (2020-86) — published LW 13 March 2020
Regulations and other miscellaneous instruments
Fair Trading Amendment (Code of Conduct for Short-term Rental Accommodation Industry) Regulation 2020 (2020-88) — published LW 13 March 2020
Rail Safety (Adoption of National Law) Amendment (Drug and Alcohol Testing) Regulation 2020 (2020-89) — published LW 13 March 2020
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.