Parties to a contract may be released at common law from further performance of their obligations in circumstances where the contract is frustrated after its formation, not by the fault of either party, where it becomes incapable of performance in accordance with its terms due to circumstances unforeseeable at the time of its formation. In such circumstances both parties are discharged from future performance of the contract.
The effect of Brexit, in whatever form it may take, on pre-Brexit contracts was recently considered by the English High Court on a declaratory claim brought by the landlord of the European Medicines Agency who asserted that its 25-year lease of its London headquarters premises in Canary Wharf would be frustrated, on the basis that the consequences of Brexit would be (1) it would no longer have capacity under EU law to maintain its headquarters outside the EU and (2) it would have no use for the premises: Canary Wharf (B4) TI Ltd v European Medicines Agency.
The court had little hesitation in finding against the EMA. The case shows the gradient likely to be faced by parties to a contract seeking to escape from their obligations under the contract on the ground of frustration attributable to the consequences of Brexit.