Discharges- frustration

Question 1

Explain what frustration is

Answer 1

Where parties are prevented from performing contractural duties due to unforseeable intervening event

Question 2

Will frustration cause liability for breach

Answer 2

No

Question 3

Whats the leading case for frustration

Answer 3

National carriers v panalpina

Question 4

What does the leading case of frustration describe frustration as

Answer 4

A supervening event that changes the nature of a contracts rights/obligations, causes discharge from further performance

Question 5

What are the 3 things that need to be proved for frustration and what case was this stated in

Answer 5

National carriers v panalpina
- must be a supervening event
- must be no fault of either party
- supervening event must significantly change the nature of the contractual performance/renders it impossible

Question 6

Explain supervening event

Answer 6

Occurs between agreement and performance, prevents performance of obligations

Question 7

What are the 3 circumstances where a party can rely on frustration to avoid liabilty

Answer 7

• destruction of subject matter
• subsequent illegality
• destruction of common venture

Question 8

Explain destruction of subject matter and state a case

Answer 8

Item of contract become unavailable, with no fault of the parties
Person die/become unavailable without choice
(Taylor v Caldwell)

Question 9

Explain subsequent illegality

Answer 9

Change in law between formation and performance cause undertaking of obligations to be contrary to law

Question 10

Explain destruction of common venture and state a case

Answer 10

Radical change cause commercial purpose of contract unable to be achieved
(Herne bay steamboat v Hutton)

Question 11

Explain no fault of either party

Answer 11

If fault of either party is evident, breach will be the appropriate area of discussion

Question 12

What are the 3 circumstances where frustration will not be available

Answer 12

• self induced frustration
• contract become less profitable
• frustrating event was forseable/mentioned in the context

Question 13

Explain self induced automatism and state a case

Answer 13

Where one party is in control of the frustration
(Maritime rational fisheries v ocean trawlers)

Question 14

Whats the case for contract has become less profitable

Answer 14

David contractors v fareham

Question 15

Whats the case for frustrating event was forseable/mentioned in contract

Answer 15

Amalgamated investment v john walker

Question 16

Explain the 3rd element to be proved for frustration (supervening event significantly changes nature of contractural performance/ renders it impossible

Answer 16

It’s impossible to perform outstanding obligations
Would be pointless to hold parties accountable to obligations as performance would be significantly different from what’s intended

Question 17

Whats the immediate effect of frustration in terms of remedies

Answer 17

Terminate contract at point of event
Existing obligations must be completed but future ones terminated

Question 18

What are the remedies that are contained in the law reform (frustrating contracts) act 1943

Answer 18

S1(2)- money paid before event can be ordered to be repaid, future payments no longer have to be paid
S1(3)- if 1 party received benefits prior to event, they may be ordered to pay sum to other party in respect of benefits
S1(4)- when estimating the above sums, the courts estimate figures that appear reasonable