The Contractual Obligations, Subsequent Impossibility and Commercial Hardship: A Study of Aspects of the English Doctrine of Frustration and the Use of Force Majeure Clauses with Some Comparison to the Law of Saudi Arabia

This study focuses on the effects of a contract of events and circumstances which occurred after the contract was entered into. The study principally examines the application of the English doctrine of frustration with comparative reference to the law applicable in Saudi Arabia. The main objective is to analyse how the English doctrine and its Saudi equivalents can provide an excuse or defence in circumstances where a party is prevented from performing contractual obligations. The study proceeds as follows. First, the doctrine of frustration is described in the context of a general overview of how a contract might be discharged. The historical development of the doctrine of frustration is then outlined together with its limitation and justifications. The application of the doctrine is then discussed in the most likely circumstances where it would be applied. The next step is to consider the central issue of commercial hardship, specifically whether it is recognised in English and also in Saudi law. Then remedies available when a contract has been frustrated are examined as well as the functionally equivalent rights and liabilities arising under the frustrated contract. The evidence presented to this point is then discussed in relation to the use of force majeure clauses and in particular their relationship with the doctrine of frustration. The study concludes that, while the English doctrine of frustration has witnessed significant developments, since it emerged as a departure from the rule of strict liability, it is still applied within a very narrow remit. Thus, the best way for contracting parties to deal with supervening events is by providing for force majeure clauses. The practical consequence of this is that where reliance upon these clauses becomes increasingly significant, with a consequent lessening of the importance of the ‘default’ rule of the doctrine of frustration. In Saudi Arabia, contract law is heavily reliant on Islamic jurisprudence, which does not have a general theory of impossibility. Instead, the concept of impossibility is drawn from scattered statements and applications in the jurisprudence, which appear broader and so perhaps less rigid than the English doctrine of frustration.