Chapter 42 - Discharge by frustration

Question 1

Discharge by Frustration

Answer 1

Where the doctrine of frustration discharges both parties from their contractual obligations where following the formation of the contract, performance of the contractual obligations become either: Impossible; or Radically different

Question 2

Grounds for Claiming Frustration

Answer 2

-Impossibility
-Illegality
-Radical change in circumstances

Question 3

Frustration - Impossibility

Answer 3

-Where it becomes impossible to carry out contract
-Shown in Taylor v Caldwell
-Also applies where becomes impossible through no fault of the contracting parties
-Shown in Jackson v Union Marine Insurance Co. ltd

Question 4

Frustration - Ilegality

Answer 4

-Contract may be frustrated as a result of a change in the law that makes the contract illegal
-Seen in Denny, Mott and Dickson Ltd v James B Fraser and Co. Ltd

Question 5

Frustration - Radical In circumstances

Answer 5

-Where there is a radical change in circumstances as the essential commercial purpose of the contract cannot be achieved
-seen in Krell v Henry

Question 6

Limits to Frustration - When frustration Cannot Apply

Answer 6

-Self induced frustration
-The contract becoming less profitable
-The event being a foreseeable risk or the event was mentioned in the contract

Question 7

Self induced frustration

Answer 7

-Frustration will not apply when the event is within the control of one party
-Seen in Maritime National Fish Ltd v Ocean Trawlers Ltd

Question 8

Force Majeure Clause

Answer 8

Excludes liability for the parties for delay in performance or the non-performance if there are extraordinary events

Question 9

Contract has become less profitable

Answer 9

-A contract becoming less profitable or more difficult to complete is not a reason for frustration of that contract
-Seen in Davis Contractors Ltd v Farnham Urban District Council

Question 10

Event being a foreseeable risk was mentioned in the contract

Answer 10

-Parties are expected to do their due diligence, especially if they are experienced in that profession