Frustration is a contract killer, automatically releasing the parties from further liability under it. But what, exactly, amounts to frustration? A theatrical promoter, based in Greece, booked a West End show, “Thriller Live”, for a number of performances in Greece. But before, and after, the contract was signed, there was civil unrest and disturbance in Greece because of austerity measures and 13 performances out of 32 were cancelled. The parties agreed that the force majeure clause did not apply but the promoter company in Greece claimed the contract was frustrated.
The case law says that frustration is not to be lightly invoked, must be kept within very narrow limits and ought not to be extended. The frustrating event should not be due to the act, election or fault of the party seeking to rely on it and must be some outside event or extraneous change of situation. The court noted that, because it alters the bargain between the parties, it only applies when the frustrating event can truly be said to take the situation outside the reasonable contemplation of the parties so as to make it just that the contract no longer applies. On the evidence, the contract was not frustrated. By the time it was signed, there were already unrest, road closures, demonstrations and violence. Both parties knew enough about the risks posed to the success of the production for it to be wrong, with the benefit of hindsight, to re-allocate those risks by releasing the defendant promoter from its contract obligations.
The promoter’s managing directors had given a payment guarantee because of non payment but they claimed it was voidable for duress because the claimant had threatened to stop further performances if the guarantee letter was not signed. The claim failed. The court said that the law of duress is based upon threat and the only threat identified was the threat not to allow the performances to continue, which was the claimant’s legal right, because of the payment arrears. In the circumstances of repeated payment defaults, low box office receipts, and the imminent early end to the run, it was not improper or illegitimate. A threat of action not itself unlawful can found a claim for duress, but the circumstances in which it will do so are limited and rare.