Overview

When economic conditions deteriorate, some parties inevitably find compliance with their contractual commitments more difficult. But can a party avoid its obligations on the basis that performance has become more expensive or onerous as a result of the economic climate? Or, alternatively, could a party get out of a contract on the grounds that economic circumstances have compromised its counterparty’s future ability to perform, even though it has not yet actually failed to perform?

The English courts have always been reluctant to let a party avoid the consequences of an imprudent commercial deal and will seek to hold parties to their agreement even where the fulfilment of their obligations has become more expensive or onerous.

A recent example is the case of Gold Group Properties Ltd v BDW Trading Ltd [2010] EWHC 323 (TCC). This involved an attempt by BDW to avoid a contract by relying on deterioration of the property market as a frustrating event automatically discharging the contract and releasing the parties from their obligations.

Click “view briefing” to read more.