Physical signing and the conclusion of credit transactions are rare today, but practical questions arise because of the current environment, including: with respect to the obligations to be provided to lenders (including the financing of advances) under a New York law governed by credit law, the covid-19 crisis raises the question of whether lenders can invoke a common law case of force majeure (or similar legal theories) to excuse such an achievement. In the absence of an explicit clause in a contract limiting performance in a force majeure event (which would be unusual in a typical credit contract), New York law provides for two limited facilities, on the basis of common law defences: (1) impossibility and (2) futility. Both bars are difficult to implement successfully and, even if successfully invoked, offer only a limited facility to lenders or an agent who wish to bog down benefits under a credit contract. Although the courts may enter into a contract because it is frustrated, it will only do so in limited circumstances. The main Irish case mcGuill/Aer Lingus Teoranta and United Airlines Incorporated has determined whether a contract can be cancelled on the basis of a frustrating contract. In this case, Mr. McGuill was a tour operator and entered into an agreement with Aer Lingus and United Airlines to transport a group of passengers from Dublin to Hawaii. However, due to a Strike by United Airlines workers, it was unable to fulfill its side of the agreement and Mr. McGuill had to enter into agreements with an alternative airline. When Mr. McGuill attempted to recover these costs from United Airlines, he argued that the contract had been thwarted.
Justice McWilliam rejected United Airlines‘ argument and set out the following principles in case of frustration: because of COVID-19‘s difficult financial situation, governments in many Asian countries have implemented different systems to assist borrowers. Many include a temporary moratorium (or freeze) on loan repayments and/or the execution of loan commitments. Regardless of this, borrowers should note, among other things, that we have seen an increased use of the MAC default case to refuse the introduction of an existing revolving loan when loans are granted to borrowers in certain troubled sectors. In recent weeks, force majeure clauses have been put forward in the wake of the global coronavirus outbreak. They are common in many commercial contracts, such as Z.B. Sales contracts, goods purchases and delivery contracts.