The Doctrine of frustration to deal with issues in contract frustration in the Sri Lankan construction industry

Abstract

Contract Frustration occurs when the performance of the contract automatically ends without default of either party by a supervening event and it is difficult to conclude whether the contract is frustrating or not as it depends on the subject matter of the Contract. Hence, parties may pursue to excuse their contractual obligations or get advantages by the bad bargain. Since the Doctrine of Frustration and Frustrated contract Acts are commonly used in other English common Law countries to address issues in contract frustration, it is required to examine the Doctrine of Frustration and its applicability to the Sri Lankan construction industry. Therefore, the aim of this research is to introduce a set of guidelines on which parties should act in a frustrating situation in the Sri Lankan construction industry. Firstly, the ways and the consequences of contract frustration were identified. Then, the concept of the doctrine of frustration and how the Standard form of Contracts has defined frustration was studied. This research employs a qualitative research approach consisting of expert interviews to identify procedures at the project level to deal with the issues of frustration. The collected data were analysed through content analysis. A framework is developed in an effort to technically rationalize the application of the doctrine of frustration. The findings of the study reveal that it is essential to review available Force Majeure clauses in the contract as the doctrine of frustration does not apply in such situations. Also, Parties shall ensure that they are aware of the doctrine of frustration before they enter into a contract and shall ensure to include some provisions for frustration in the contracts to avoid potential risks and disputes. Moreover, parties may follow the provisions specified in the Frustrated Contract Acts to get the protection of the party’s payment rights.