Consequences of Frustration

Question 1

What happens if a frustrating event occurs?

Answer 1

all future obligations are automatically discharged by the common law

Question 2

What does The Law Reform (Frustrated Contracts) Act 1943 deal with?

Answer 2

obligations arising PRIOR to the frustrating event ONLY.

Question 3

What is 1/3 provision from the act?

Answer 3

Money paid before the frustrating event can be recovered

Question 3

What is 2/3 provision from the act?

Answer 3

Money that should’ve been paid before frustrating event no longer needs to be paid.

Question 3

What is 3/3 provision from the act?

Answer 3

Expenses incurred by payee (usually the supplier) can be recovered out of the total sum paid/payable before the event.

recovery of expenses = courts discretion

Question 3

In what way can the court exercise its discretion?

Answer 3

order such retention/ recovery of money as it thinks just in all the circumstances to account for expenses incurred by the payee.

Question 4

How must the expenses incurred by the payee relate to?

Answer 4

directly related to an attempt to perform the contract.

Question 4

The amount retained or recovered is…

Answer 4

capped + cannot exceed:
(i) the actual expenses incurred; +
(ii) the amount paid or payable prior to the frustrating event.

Question 6

Who establishes that the expenses were incurred + that it’s just for court to deduct them from sums paid/ payable to him before frustrating event.

Answer 6

the payee

Question 10

Therefore if nothing was paid or payable before the frustrating event…

Answer 10

the party will not be able to get any expenses at all.

Question 11

Does the sum retained/ recovered to account for the expenses be actual expenses incurred?

Answer 11

NO - it’s only what court considers to be a just sum having regard to all the circumstances of the case.