Doctrine Of Frustration Flashcards
What is discharge of contract by frustration?
It is when a contract entered has subsequently become impossible to perform( not impossibility in mistake).
It steps in where there is an absence of hardship or force majeure clauses inserted into contracts that deal with unforeseen circumstances. Particularly relevant in building or engineering contracts
Give a Definition of frustration
Treital: a contract may be discharged if, after formation, events occur making its performance impossible or illegal and in certain analogous situations.
Which case historically refers to absolute contract rule
Paradine v Jane 1647 Aleyn 26
Jane owed rent under lease to Paradine but was forced off land for 3 years due to invading army. Claimed they should not be liable to pay.
Held: as it was in the contract without any express provision of what happens in these events, Jane would have to pay.
Frustration was developed due to harshness of these decisions in events where it was out of the parties control.
What the two theories behind the doctrine of frustration and which is most used?
1- new implied term( Taylor v Caldwell)
It may not be written into the contract but both parties would of suggested say ‘of course’
2-change in contractual obligation( Davis contractors)
There must be a significant change in the obligation that if performed would be very different to original contract .
The second is generally preferred.
How might a contract be frustrated?
Through:
Impossibility
Illegality
Change in circumstances
What sort of things make a contract impossible to perform?
The subject matter of contract is destroyed ( Taylor v Caldwell 1863) ( music hall)
The subject matter becomes unavailable ( Jackson v union marine insurance co ltd 1874)
A person becomes unavailable to perform through illness
( Robinson v Davidson 1871)
Or unavailable for good reason ( Morgan v Manser 1948)
There is an unavoidable but excessive delay( pioneer shipping ltd v BTP Tioxide Ltd1981)
Why would a contract become illegal to perform?
If there is a change in law- happened during war time. The courts do not expect the parties to be contractually bound to illegal practices.
( Denny, Mott + Dickson ltd v James B Fraser and co ltd 1944
Give examples where the contract may be frustrated through change of circumstances which destroys the central purpose of the contract that it’s commercial purpose was destroyed?
Krell v Henry (1903)
Room hired for coronation- but was postponed. The contract was frustrated and Henry did not have to pay for the room as the procession was main purpose of contract
BUT
Herne Bay Steamboat Co v Hutton 1903
Contract not frustrated as the boat and viewing fleet were still possible so there was still commercial value in the contract.
When will the doctrine of frustration not apply?
If it was self induced
Maritime National Fish v ocean trawlers(1935)
Chose to keep 3 licences for himself rather than fulfil the contract
If it is more difficult/ expensive to perform
David Contractors Ltd v Fareham UDC (1958)
If there are express provision included in contract
Jackson v The Union Marine Insurance Co Ltd 1874
If the frustrating event was foreseen
Walton Harvey ltd v Walker and Homfrays ltd 1931
When it is determined the contract is frustrated when will the contract stop?
Immediately ‘ forth with, without more’ and releases the parties from their obligations .
When the contract is terminated are claimants still bound to the obligations made prior to the frustrating event
Yes, Chandler v Webster 1904
Unable to reclaim money for room to view coronation as paid in advance.
House of Lords felt this was harsh
How did the House of Lords modify the harshness in chandler?
In Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour ltd 1943, they allowed the polish company to recover £1000 as there was a total failure of consideration.
Was the Fibrosa case satisfactory?
No, because it didn’t provide a just outcome for both sides - the manufacturer could not claim for any work undertaken prior to frustration.
What was the act to correct the limitations?
The law reform( frustrated contracts ) act 1943
Which section covers recovery of money pain in advance?
S1(2)
Money paid is recoverable( fibrosa)
Any money due under contract no longer payable( Taylor)
