Force majeure, the principle of change of circumstances, and the doctrine of frustration during the COVID-19 pandemic: the case of commercial leases and judicial responses in China and New Zealand

Abstract

ABSTRACT This paper analyses the application of force majeure, the principle of change of circumstances, and the doctrine of frustration in the context of the COVID-19 pandemic in New Zealand and China. The paper will first outline the general legal test and legal consequences of the three doctrines. Secondly, the paper will discuss the legal tests and legal consequences of the three doctrines specifically in New Zealand and China and in the context of COVID-19. Thirdly, the paper will discuss the similarities and differences between the three doctrines. In the second part of this paper, the paper will discuss how the three doctrines apply to commercial lease cases in the context of COVID-19. The paper will select two commercial lease cases in New Zealand and China to analyse the robustness of all three legal doctrines in providing practical workable solutions for tenants and landlords during government-imposed lockdowns and enforced closures of leased premises. The paper illustrates how the differences in the legal tests, legal consequences and underlying rationales of the doctrines result in different outcomes of a case. The paper concludes that the doctrines each have their strengths and weaknesses and other civil and common law countries can learn from the experiences of China and New Zealand. Furthermore, the paper suggests that courts should carefully consider the relevant facts and circumstances of a case when applying legal doctrines. Moreover, courts need to strike the right balance between doing the victims of unforeseen circumstances and upholding the principle of the sanctity of contract. The analysis of the three doctrines is particularly useful in this day and age where there is a high likelihood of the occurrence of another pandemic-level event and causing unprecedented disruptions to the commercial world. Moreover, the research has provided tenants and landlords with a good starting point as to how to protect themselves in the event of an unforeseen event.