Two different tools
Force majeure and frustration address the same problem from opposite directions. Force majeure is contractual: its threshold is whatever the clause says (often lower than frustration), its usual consequence is suspension or relief as drafted, it normally requires notice, and it can excuse performance partially. Frustration is a common law doctrine: its threshold is the high radically different test, it discharges the contract automatically and entirely, it requires no notice, and it is applied by the court as a matter of law, not by the parties' words.
So the two differ in threshold, consequence, and control: force majeure is the parties' creature; frustration is the court's. Most changed-circumstances disputes are really about which one is in play.
How a force majeure clause affects frustration
The existence of a force majeure clause materially affects a frustration argument. If the contract has contemplated and provided for the supervening event, performance can hardly be radically different from what the parties agreed - so frustration usually cannot apply. A comprehensive force majeure clause covering the event therefore tends to displace frustration.
But not completely. Bank Line Ltd v Arthur Capel & Co [1919] AC 435 established that frustration can still operate where the force majeure clause does not make full and complete provision for the event and its effects. So frustration may still apply where the clause does not cover the specific event, addresses its consequences inadequately, or where supervening illegality engages public policy that the parties cannot contract around.
When each is likely to apply
In practice: if the event is on the force majeure list (or within its catch-all) and the clause provides a workable consequence, the clause governs - usually suspension, extension, and a longstop. If the event is outside the clause, or the clause is silent on its effects, frustration may be argued - but only if the high threshold is met. And if performance becomes illegal, frustration (or the illegality itself) may override even a contractual allocation.
Because the thresholds and consequences differ so much, parties should decide deliberately which regime they want to govern which risks - and draft so the answer is clear rather than left to a court.
Drafting to preserve or exclude frustration
If you want to keep frustration available as a backstop, use narrow force majeure event definitions and add an express saving - for example, that nothing in the force majeure clause limits either party's right to rely on the doctrine of frustration, and that circumstances not addressed by the clause may still discharge the contract by operation of law.
If you want to exclude frustration, do the opposite: provide a comprehensive force majeure clause and, for payment obligations, consider hell or high water wording making the obligation absolute and unconditional regardless of any event. Such clauses are common in equipment leasing, aircraft finance, and project finance, and are enforced according to their terms - but they must be drafted with precision.
The practical takeaway
The hierarchy is straightforward: contractual provisions prevail; frustration fills the gaps only where the contract makes no sufficient provision; and where neither applies, losses lie where they fall. So the force majeure clause is the main event - frustration is the narrow safety net behind it.
Get the clause right, decide explicitly whether frustration is preserved or excluded, and keep economic hardship in a separate hardship clause. That combination allocates changed-circumstances risk deliberately, instead of leaving it to an after-the-event argument about a doctrine the courts apply sparingly.
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Practical checklist
- Match the regimes: force majeure for contemplated events (suspension/relief); frustration for the unprovided-for, radically different event.
- Expect a force majeure clause covering the event to displace frustration.
- Remember frustration can still apply where the clause does not fully provide for the event (Bank Line v Arthur Capel [1919] AC 435) or on supervening illegality.
- Decide deliberately whether to preserve frustration (saving clause) or exclude it (comprehensive force majeure).
- For absolute payment obligations, consider hell-or-high-water wording - drafted precisely.
- Keep economic hardship in a separate hardship clause, not in either regime.
This guide is informational only and is not legal advice. It does not replace advice from licensed counsel on the facts of a specific transaction.
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