Frustration

Question 1

1. A Frustrating Event…

Answer 1

A frustrating event before the contract is completed may discharge (end) the contract. There are 3 types of frustrating event.

Question 2

2. Impossibility of performance where it is…

Answer 2

Impossibility of performance where it is impossible for the contract to be completed (Nichol and Knight v Ashton Eldridge, Taylor v Caldwell). This will not apply if performance is possible just more difficult or expensive than anticipated (Davis v Fareham, Tsakiroglou v Noblee Thorl).

• Here…

Question 3

3. A Radical Change in Circumstances…

Answer 3

[IF RELEVANT] A radical change in circumstances if the change relates to a main purpose of the contract (Krell v Henry). The change must be sufficiently radical (Herne Bay v Hutton).

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Question 4

4. Illegality of the contract…

Answer 4

[IF RELEVANT:] Illegality of the contract where a change in the law makes the contract illegal to perform (Shipton Anderson, Denny v James Fraser).

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Question 5

5. There are other specific situations where…

Answer 5

[IF RELEVANT:] There are other specific situations where frustration may be considered – leases (National Carriers v Panalpina) and contracts of employment (Robinson v Davisdon).

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Question 6

6. However, Frustration will not apply where…

Answer 6

[IF RELEVANT: However, Frustration will not apply where:

It is self-induced ie. one of the parties’ fault (the party who is trying to claim frustration) (Maritime National Fish v Ocean Trawlers)

OR

There was a foreseeable risk of the frustrating event occurring (John Walker and Sons).

Question 7

[IF THERE HAS BEEN A FRUSTRATING EVENT WHERE MONEY HAS BEEN PAID]

7. Under Section 1(2) of the Law Reform (Frustrated Contracts) Act 1943, money paid before the frustrating event is…

Answer 7

[IF THERE HAS BEEN A FRUSTRATING EVENT WHERE MONEY HAS BEEN PAID]

Under Section 1(2) of the Law Reform (Frustrated Contracts) Act 1943, money paid before the frustrating event is recoverable minus the other parties ‘just’ expenses – this includes paying in advance for goods and then having the order cancelled because new legislation has prohibited these goods.

When the contract is frustrated, there is no longer an obligation to pay the price agreed for goods and services.

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Question 8

[IF THERE HAS BEEN A FRUSTRATING EVENT WHERE NO MONEY HAS BEEN PAID, BUT ONE PARTY HAS GAINED A BENEFIT]

8. Under Section 1(3), where no money has been paid in advance…

Answer 8

[IF THERE HAS BEEN A FRUSTRATING EVENT WHERE NO MONEY HAS BEEN PAID, BUT ONE PARTY HAS GAINED A BENEFIT]

Under Section 1(3), where no money has been paid in advance, the value of any benefit gained by one party must be paid back to the other party.

The judge will assess this.

• APPLY IF RELEVANT - Here, [eg. as X attracted more customers to his pub because of Ys band, the court may award damages which reflect the increase in custom for X].