TSMP Law Corporation director Danny Quah was quoted in an article published by Business Times on 11 October 2021 on Dathena’s win against JustCo. Dathena was a tenant with co-sharing space provider JustCo, and the case may have far-reaching consequences for contracting parties.
“Judgment could open floodgates to action citing pandemic ‘frustration’ of a contract,” said Danny.
He said the case potentially has far-reaching consequences for contracting parties.
He noted that the judgment may support the argument that Covid-19 restrictions are grounds on which the courts may find contracts were frustrated. “If this is the case, that will open the floodgates to parties in all types of contracts to get out of their agreements on the basis of the pandemic.”
If the doctrine of frustration is successfully invoked, there will likely be “a great deal of uncertainty in the market”, he added. “More work for disputes lawyers is seldom a good thing for the economy,” he added.
He said “In my view, it is unusual that a contract between two substantial businesses would come under UCTA.”
He commented that there is a chance that some companies may take this case as a cue to start separately negotiating all their contracts in the future so that they are not on “standard terms” and Section 3 will thus not be applicable.
“This will only add to their costs. And it’s likely for these costs to be passed on to consumers, which is unfortunate as consumers are the very stakeholders UCTA intends to protect,” he said.