15 Frustration Flashcards
What is the nature of a ‘frustrating event’ ?
the terms of the contract itself, its matrix or context, the parties’ knowledge, expectations,assumptions and contemplations, in particular as to risk, as to the time of contract, at any rate so far as these can be ascribed mutually and objectively, and then the nature of the
supervening event, and the parties’ reasonable and objectively ascertainable calculations as to the possibilities of future performance in the new circumstances.
Case Authority for an event that does not frustrate a contract as it becomes more difficult (not further specified in the contract)
Closing of the Suez Canal in
Tsakiroglou & Co v Noblee and
Thorl (1962) the closure of the Suez Canal did not frustrate a contract for the carriage
of goods from Port Sudan to Hamburg. The contract had not specified the route and
the fact that the alternative route, via the Cape of Good Hope, would take much longer
was not sufficient to frustrate the contract.
Destruction of subject matter (case authorities)
Taylor v Caldwell (1863)
Full destruction may not be necessary. In
Asfar v Blundell (1896), the contamination of perishable goods, which rendered them unusable, was held to be equivalent to destruction
Personal incapacity (case authorities)
Condor v Barron Knights (1966)
Clear case of frustration will be where both parties have agreed that the contract is to be carried out by a particular individual, and that individual dies, or is too ill to perform
(The court will need to be satisfied,
however, that the contract was not simply for work to be done, but for it to be done by
the particular individual who is unavailable)
Non-occurrence of an event (case authorities)
Krell v Henry (1903)
a room overlooking the route
of the coronation procession had been hired for the purpose of watching it. When
the procession was cancelled, the contract for the hire of the room was held to be
frustrated (see also Chandler v Webster (1904)). It has subsequently been implied that
the decision in Krell is perhaps as far as the doctrine of frustration should be pushed
(North Shore Ventures v Anstead Holdings (2011)).
Effects of war (case authorities)
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd (1943).
Trading
Metropolitan Water Board v Dick Kerr
(1918)
Property
Finelvet AG v Vinava
Shipping Co Ltd (1983)
Shipping
Other government action (Case authorities)
In Gamerco SA v ICM/
Fair Warning Agency (1995) a stadium which had been booked for a pop concert was
closed for reasons of health and safety. It was held that the contract for the hire of the
stadium was frustrated. It is also implicit in Amalgamated Investment and Property Co
Ltd v John Walker & Sons Ltd (1976) that the listing of a building as being of architectural
and historical interest (thus limiting the possibilities for its development) could
frustrate a contract for its sale (though on the facts it did not)
Other frustrating events (case authorities)
Other types of event which have led to contracts being frustrated include industrial
action (The Nema (1981)) and the accidental running aground of a ship (Jackson v
Union Marine Insurance Co Ltd (1874)). As indicated above, however, the categories of
frustrating event are not closed. It will always be possible to argue that some novel
occurrence has frustrated a contract, provided that it has had the required effect on
the obligations of either or both parties
Test of Frustration
“Radical change in Obligation test” (objective)
-> Test formulated in Davis Contractors v Fareham (1956)
1. Without default of either party
samples of fault by one party:
Maritime National Fish Ltd v Ocean Trawlers Ltd
Failure to obtain licence
-
The Super Servant Two [1990]
Choice of two ships
2. Contractual obligation is incapable of being performed, because of a radical change in the circumstances.
Krell v Henry -
Kings Coronation was cancelled
-
Fibrosa Spolka v Fairbairn (aka Fibrosa case) [1943]
World war II
-
Pioneer Shipping Ltd v BTP Tioxide Ltd (‘The Nema’)
Strike at the port
-
- Every hardship, inconvenience, or material loss does not attract the doctrine of frustration / only frustration if thing undertaken would, if performed, be a different thing from that contracted
“The Eugenia”
- Suez canal was closed, doctrine did not apply because of alternative option available
-
British Movietone News Limited v London and District Cinemas
-Change of circumstances, if only inconventient is not sufficient for the doctrine
-
Davis Contractors v Fareham (1956)
-The fact that a contract becomes more difficult to perform or not so profitable is not sufficient to amount to frustration. It was still possible to perform the contract.
List the categories of Frustration and case authority for each
- *1. Subject matter is destroyed or ceased to exist**
- *common law impossibility**
- > Taylor v Caldwell (1863)
- Destroyed music hall by fire
- *2. Frustration of purpose**
- -> Krell v Henry (1903)*
- Cancelled coronation
- *3. Incapacity or death**
- -> Robinson v Davison (1871)*
- Sick piano player
- Frustration by change in law
- > Baily v DeCrespigny (1869)
- Train line
- > Denny, Mott & Dickinson Ltd v James B Fraser
- Control of Timber - Frustration by delay
Pioneer Shipping Ltd v BTP Tioxide Ltd (‘The Nema’)
- Arbitration; Shipping
What is the effect of frustration and by which rules is it governed ?
One under the common
law and the other under the Law Reform (Frustrated Contracts) Act 1943. In most cases
the 1943 Act will apply
Ultra Vires
Ultra vires is a Latin phrase meaning “beyond the powers”. An act which requires legal authority but is done without it is characterised in law as ultra vires. Its opposite, an act done under proper authority, is intra vires (“within the powers”).
Case Authority
