Discharge by Frustration

Question 1

General Rule

Answer 1

Paradine v Jane
-If a party has assumed an Absolute obligation, even if the circumstances make performance of this obligation Impossible, he is liable for Breach of Contract
Taylor v Caldwell
-Implied condition in the contract excusing the Parties if performance became impossible without the fault of the Parties

Question 2

Define Frustration

Answer 2

• A Supervening Event – Apply to facts
• Which is Unforeseen (not covered by a provision)
• Outside of the Control of the Parties – Apply to facts - Maritime Fish Ltd
• Rendering the Contract Impossible to Perform or Radically Different – Apply to Facts - Davis Contractors

Question 3

Events will Frustrate - Essential person Unavailable

Answer 3

Condor v Barron Knights

Question 4

Events will Frustrate - Essential thing Unavailable

Answer 4

Taylor v Cadwell

Question 5

Events will Frustrate - Fundamental event doesn’t occur

Answer 5

Krell v Henry

Question 6

Events will Frustrate - Government intervention

Answer 6

Met Water Board v Dick Kerr

Question 7

Events will Frustrate - Illegality of the Contract

Answer 7

Fibrosa v Fairbairn

Question 8

Events WILL Frustrate - Delay – Consider Length and Time Obligation in Performance – Delay will only Frustrate the Contract if it has become Radically Different

Answer 8

Met Water Board v Dick Kerr

Question 9

Events will NOT Frustrate - Essential person Unavailable for Insignificant period of time

Answer 9

.

Question 10

Events will NOT Frustrate - Event is Not directly related to Objective of the Contract

Answer 10

Herne Bay v Hutton (contrast with Krell v Henry)

Question 11

Events will NOT Frustrate - Event was / should have been Foreseen

Answer 11

Davis Contractors v Fareham (Unless, Parties made no provisions for the event in the Contract – The Eugenia)

Question 12

Events will NOT Frustrate - Prices Increase / Contract become more Expensive / Difficult to Perform

Answer 12

National Carriers v Panalpina

Question 13

Events will NOT Frustrate - If Event is in anyway Self-Induced – Any Element of Choice will Prevent Frustration

Answer 13

Super Servant Two

Question 14

Events will NOT Frustrate - Delay and Leases of Land (not being able to use property for 2 out of 10 yrs. seen as Not Frustrating)

Answer 14

Davis Contractors v Fareham

Question 15

If the cause of the frustration is unknown – Onus in on Party rebutting frustration claim to prove fault of other Party

Answer 15

Joseph Constantine Steamship v Imperial Smelting

Question 16

Effect if the Contract is Frustrated - Common Law

Answer 16

1. Contract is automatically Discharged / Terminated
   - Fibrosa v Fairbairn
2. Future Obligations Cease
   - Krell v Henry
3. No Parties are in Breach

Question 17

Effect if the Contract is Frustrated - Statutory Rules

Answer 17

Law Reform (Frustrated Contracts) Act 1943 will apply unless excluded by a term in a contract - s.2(5) - s.1(2)
Courts discretion to avoid unjust enrichment - Gamerco SA v ICM
S.1(3) - Valuable benefit - Benefit must survive the Frustrating event - BP Exploration v Hunt

Question 18

Effect if the Contract is NOT Frustrated

Answer 18

1. Type of Breach
2. Remoteness Rules - Hadley v Baxendale - (1) Arises naturally from the breach (2) Reasonable to suppose it was within the reasonable contemplation of the parties at the time of the contract
3. Measure of Damages
4. Mitigation - British Westinghouse