Frustration

Question 1

Definition of frustration

Answer 1

Contract is discharged when through no fault of either party, an unforeseen eventoccurs after formation of the contract which prevents performance occurring or makes performance either:
- Impossible
- Radically different from what both parties expected.

Question 2

First frustration case

Answer 2

Taylor v Cardwell (1863)

Question 3

Taylor v Cardwell (1863)

Answer 3

Fire made performance impossible.

Question 4

Davies Contractors v Fareham UDC (1956) establishes…

Answer 4

Assessing frustration is a ‘multi-factorial approach’: courts consider the context of the contract.

Question 5

Name the 5 sub-categories of frustration

Answer 5

1) Impossibility
2) Supervening illegality
3) Unavailability of subject matter
4) Frustration of common purpose
5) Impracticability

Question 6

Melli Bank plc v Holbud Ltd (2013) establishes…

Answer 6

Contractual performance becoming more expensive is insufficient for frustration.

Question 7

Stubbs v Holywell Railway Co. (1867) establishes…

Answer 7

For personal contracts, death or permanent illness IS sufficient for frustration.

Question 8

Can temporary impossibility amount to frustration?

Answer 8

Yes

Depends on impacts of non-performance - Pioneer Shipping Ltd v BTP Tioxide Ltd (1982).

Personal contracts - Robinson v Davison

Question 9

Main case on unavailability of subject matter

Answer 9

Gamerco SA v ICM / Fair Warning Agency Ltd (1995)

Question 10

Gamerco SA v ICM / Fair Warning Agency Ltd (1995)

Answer 10

GunsNRoses tour.
Stadium was declared unsafe. As no alternative venue could be found in time, there was frustration due to unavailability of the subject matter.

Question 11

Case establishing taht courts assess frustration similarly to innominate terms.

Answer 11

Nicholl & Knight v Ashton, Eldridge & Co (1901).

Question 12

Case establishing that particular means of performance must be contractually agreed.

Answer 12

Tsakiroglou & Co Ltd v Noblee Thorl GmbH (1962)

Question 13

Tsakiroglou & Co Ltd v Noblee Thorl GmbH (1962)

Answer 13

As going through the Suez Canal was not specified as the route in the contract (even though it was the route expected by both parties) contract was NOT frustrated when the Canal was blocked.

Question 14

Howell v Coupland (1876) establishes…

Answer 14

Where a farmer’s specific crop of potatos did not grow properly, the contract WAS frustrated due to the specificity of the goods.

Question 15

Blackburn Bobbin Co Ltd v TW Allen & Sons Ltd (1918) establishes…

Answer 15

Timber was not specified as needing to be from the Netherlands, so the contract was not frustrated as the timer could be gained from a different source.

Question 16

Frustration by supervening illegality means…

Answer 16

Illegality after formation but before performance.

Question 17

Fibrosa v Fairbarn (1943) - contract was frustrated as…

Answer 17

Before performance could begin, contract was held to be frustrated fue to outbreak of war.

Question 18

Frustration of common purpose means…

Answer 18

Performance is technically possible, but performance is radically different to what was envisaged by both parties.

Question 19

Name the 2 coronation cases.

Answer 19

Krell v Henry (1903)
Herne Bay v Hutton (1903)

Question 20

Davies Contractors v UDC (1956) - Radcliffe LJ stated that frustration by commercial impracticability is not…

Answer 20

‘It is not hardship or inconvenience or material loss itself which calls the principle of frustration into play.’

Question 21

The Sea Angel (2007)

Answer 21

Unlawful detention of a ship: court held that risk of detention was foreseeable, so no frustration.

Illustrates harshness of limits on frustration.

Question 22

Case estabslishing the effect of frustration?

Answer 22

Hurji Mulji v Cheong Yue Steamship Co Ltd (1926)

Question 23

Hurji Mulji v Cheong Yue Steamship Co Ltd (1926) establishes…

Answer 23

The result of frustration is to discharge the contract: the contract ends automatically.

Question 24

Common law position: money paid in advance of frustration is only recoverable where…

Answer 24

There has been a complete failure of consideration: Fibrosa SA v Fairbairn Lawson Combe Barbour Ltd (1943)

Question 25

Common law position re recovery of money after frustration…

Chandler v Webster (1904) establishes… UNLESS…

Answer 25

Money paid or paid in advance that cannot be recovered must still be paid, UNLESS there has been a ‘complete failure of consideration’ (Fibrosa v Fairbairn 1943).

Question 26

Statutory method to recover money following frustration…

Answer 26

Law Reform (Frustrated Contracts) Act 1943

Question 27

s.1(2) Law Reform (Frustrated Contracts) Act 1943 establishes…

Answer 27

Sums paid before frustrating event CAN be recovered, but only where performance is prevented by frustration and the frustrating event cannot be severed.

Question 28

s.1(3) Law Reform (Frustrated Contracts) Act 1943 establishes…

Answer 28

If part of a contract has been performed before the frustrating event and one party gains a ‘valuable benefit’, this money will be recoverable (subject to the courts’ discretion).

Question 29

3 circumstances where the Law Reform (Frustrated Contracts) Act 1943 does not apply?

Answer 29

s.2(3) If parties have made no provision (force majeure clauses): s 2(3)

s.2(4) For wholly performed obligations that can be severed from frustrated ones: s 2(4)

s.2(5) To some carriage of sea contracts, insurance contracts and contracts for sale of specific goods: s 2(5).