Given the temporary closure of many businesses based on Governments direction, and by the owners own accord, it is likely that many contracts made may not be fulfilled during this pandemic. In such circumstances what are your rights?
We answer that very question using an example of a recent enquiry we received.
We had an enquiry from a family who have paid a large sum deposit to a wedding hall owner. The hall is booked for a wedding in 2 weeks’ time, which cannot take place now as a result of the coronavirus (Covid-19) pandemic. The hall owner is prepared to give another date in October but refuses to return the deposit for outright cancellation. Does the family have a claim for a refund?
There is an established case law that if a contract cannot be performed because of unforeseen circumstances beyond either party’s control than on the basis that it is frustrated, both parties can walk away. The respective obligations under the contracts are discharged. Thus, any payment(s) made are to be returned and any sum due need not be paid.
Case law for contract non-performance
This case law was made into an act of Parliament in 1943 when the Law Reform (Frustrated Contracts) Act was passed. Section 1 (2) of the Act sets out the remedy available to the parties:
(2) All sums paid or payable to any party in pursuance of the contract before the time when the parties were so discharged (in this Act referred to as “the time of discharge”) shall, in the case of sums so paid, be recoverable from him as money received by him for the use of the party by whom the sums were paid, and, in the case of sums so payable, cease to be so payable
If any of you are in this position, please contact us to discuss the matter in more detail. We will advise you on your rights for a fixed fee and if appropriate, thereafter represent you on a ‘no win no fee’ basis.
Edited by Talha Fazlani