Discharge by Frustration

Question 1

What is frustration?

Answer 1

events occurring after formation of contract which render performance radically different from that which was agreed to @ time contract formed.

Question 2

What isn’t frustration?

Answer 2

• merely an increase in expense / onerousness
• caused by the default of a party
• which the parties could reasonably have contemplated

-provided for in the contract

Question 3

What is the effect of frustration?

Answer 3

If contract frustrated = end aut:
parties = no choice in the matter.
Frustration may be raised as a defence to an action for breach of contract.

Question 4

What might render performance radically different?

Answer 4

(a) Performance is impossible;

(b) Performance is illegal; or

(c) The common purpose of the contract is frustrated.

list not exhaustive, nor will all frustrating events fit neatly into one category or another.

Question 5

When is ‘performance impossible’ invoked?

Answer 5

circumstances where contract = impossible to perform due to total or partial destruction of some object necessary to the performance of the contract.

Question 6

Can impossibility extend to situations of death/ illness of one of the parties in a personal contract, esp where a specified individual is engaged to render a particular service?

Answer 6

YES

Question 7

Can temporary unavailability discharge a contract if the interruption is such as to make performance substantially different from what was originally undertaken?

Answer 7

YES

Question 8

What is considered for establishing frustration?

Answer 8

amount of time left to run in the contract is the starting point only in establishing frustration.

Question 9

What type of approach is adopted when assessing whether unavailability was sufficient to amount to frustration?

What factors are to be considered?

Answer 9

A multifactorial approach.

Factors to consider:
- terms of contract itself
- its matrix or context
- parties’ knowledge/ expectations/ assumptions + contemplations, esp re risk = ascribed mutually + objectively
- nature of supervening event
- parties’ reasonable + objectively ascertainable calculations as to possibilities of future performance in the new circumstances

Question 10

How else may a contract be frustrated?

Answer 10

change in law/ state intervention renders performance illegal

Question 11

Can a contract be frustrated despite fact that it’s still physically possible to carry it out?

Answer 11

YES

Question 12

Does the joint purpose of the contract have to be for one party or both?

Answer 12

for both parties.

Question 13

How does an event which merely causes an increase in expense / onerousness work?

Answer 13

Just because that event renders that contracted for by one party worth less than he anticipated/ merely makes the contract more expensive to perform = unlikely to frustrate contract

Question 14

Who proves that the event was self-induced + therefore does not frustrate the contract?

Answer 14

Burden on party alleging self-induced frustration to prove that it is.

Question 15

What happens if you could have foreseen an event but failed to make a provision for it in your contract?

Answer 15

doctrine of frustration will be less likely to apply.

Question 16

How is foreseeability tested as to whether a contract can be frustrated?

Answer 16

the less that an event, in its type + impact, is foreseeable = more likely to be a factor which, depending on other factors in the case, may lead to frustration

Question 17

What CANNOT the doctrine of frustration override?

Answer 17

express and unambiguous contractual provisions for the frustrating event.

Question 18

What is a force majeure clause in commercial contracts and what do they commonly include?

Answer 18

clause states what will happen to contractual relationship between parties should partic set of circumstances (which could otherwise amount to frustrating events) materialise.

often refer to acts of terrorism, war and ‘Acts of God’