19 July 2021
#Property, Planning & Development, #COVID-19
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The past weekend’s expanded greater Sydney shutdown may have you wondering about frustration and lockdowns. Can a tenant, who is legally unable to trade, reasonably argue the lockdown has frustrated their lease, bringing it to an end? Can a landlord do likewise? In short – no, and we explain why below.
Frustration
A frustrating event terminates a contract, not at a party’s election, but automatically. Such an event, and if not caused by a party’s default, must create a ‘radically different’ environment from that originally contemplated. This includes where the contract’s performance becomes impossible, suggesting a possible analogy with the current COVID-19 lockdowns. Take, for example, a cinema chain banking on weekends of decent box office and snack sales, only to miss out on showing Black Widow, and maybe soon Top Gun: Maverick.
However, COVID-19 and related lockdowns are unlikely to frustrate leases and other land-based contracts because:
We hope this short overview provides some guidance to tenants and landlords during a stressful and ongoing situation. If you have any questions about your leases, please get in touch with us.
Author: Bede Haines
Disclaimer
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 article is accurate at the date it is received or that it will continue to be accurate in the future.
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