Supervening event CASES

In English law, a supervening event is an occurrence after contract formation (or after a breach) that changes the parties’ legal position. The term is used in two main contexts. First, in frustration, an unforeseen event makes performance impossible or radically different, bringing the contract to an end by operation of law. Secondly, in damages assessment, later events may affect the value of the loss (for example, showing that the loss would have ended earlier, or that benefits should be brought into account). The phrase is sometimes used loosely in tort, but the specific causation doctrine there is novus actus interveniens.

Definition and principles

Frustration. A contract is frustrated when, without fault of either party, an unforeseen event occurs after formation that makes performance impossible, illegal, or fundamentally different from what was agreed. The bar is high: mere hardship, increased expense, or foreseeable risks usually do not suffice. Frustration cannot be self-induced. If frustration occurs, the contract ends prospectively and loss is adjusted under the Law Reform (Frustrated Contracts) Act 1943 (subject to any contractual allocation such as force majeure clauses).

Damages and subsequent events. When valuing damages for breach, the court aims to put the claimant in the position they would have been in but for the breach. Later real-world events may be relevant if they show what would actually have happened (for example, that the contract would have lawfully ended early, or that the market moved). The “breach-date rule” is flexible: justice may require taking account of known subsequent events to avoid over- or under-compensation.

Common examples

• Supervening illegality or impossibility (frustration): new legislation banning the contracted activity; destruction of the subject matter; cancellation of an event that underpinned the contract’s purpose.
• Force majeure interplay: a contract contains a force majeure clause allocating risk and remedies for defined supervening events. Courts usually apply the clause rather than the general frustration doctrine if it covers the situation.
• Subsequent events and damages: after an anticipatory breach, a later market collapse or a separate termination event shows the original contract would have ended sooner; damages reflect the shorter period. Conversely, a benefit causally linked to the breach (for example, resale profit) may be brought into account.
• Not tort causation: in negligence, a post-breach event that breaks the causal chain is analysed as novus actus interveniens, not simply as a “supervening event”.

Legal implications

• Frustration consequences: the contract ends automatically from the time of the frustrating event. Under the 1943 Act, money paid is recoverable and money payable ceases to be due, subject to the court’s power to allow a party to retain or recover expenses and to make adjustments for valuable benefits conferred.
• Risk allocation: force majeure and hardship clauses can displace or refine frustration by specifying what counts as a qualifying event, what notice is required, and what remedies (suspension, extension, termination) follow.
• Damages valuation: courts may consider subsequent events known at trial where doing so better reflects the position the claimant would have been in. The aim is compensatory accuracy; avoid double counting when giving credit for benefits or discounts for risks.
• Evidence: contemporaneous documents, market data, expert evidence and the parties’ own likely actions are central to proving whether frustration occurred and how later events affect loss.

Practical importance

At the drafting stage, use clear force majeure and change-in-law clauses to allocate supervening risks and set procedures (notice, mitigation, termination). When a disruptive event occurs, analyse whether the contract is truly impossible or fundamentally different, or whether performance is merely harder or costlier. Preserve evidence about timing, causation and alternatives. In damages cases, build (or challenge) a realistic counterfactual that takes later events into account so awards reflect the loss that would actually have been suffered.

See also: Frustration; Force majeure; Law Reform (Frustrated Contracts) Act 1943; Damages; Mitigation; Breach-date rule; Novus actus interveniens; Remoteness.