Frustration

Question 1

Why did the doctrine of frustration arise?

Answer 1

By the 19th century, was realised that the rule of absolute contract could be unfair

Question 2

What does frustration do?

Answer 2

Frustration kills the contract. It allows a party to be released from further obligations on the point that the contract had become radically different.

Question 3

Does frustration have particular elements?

Answer 3

No, it is inherently imprecise.

Question 4

What kind of event results in frustration?

Answer 4

Must be a supervening event.

Question 5

What are a few well established categories of frustrating events in contract law?

Answer 5

1. Unavailability of thing or person essential to performance – Taylor v Caldwell 1863
2. Unattainability of purpose – Krell v Henry 1903
3. Supervening illegality – Rayneon (NZ) Ltd v Fraser 1940

Question 6

Are there wide or narrow limits for frustration?

Answer 6

The doctrine of frustration continues to operate within very narrow limits.

Question 7

Why does frustration have narrow limits?

Answer 7

Because the effect of frustration is to kill the contract.

Question 8

What does Planet Kids outline as the three salient features of contact frustration?

Answer 8

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Question 9

What is the Davis Contractors Ltd v Fareham Urban District Council test for frustration?

Answer 9

Frustration occurs wherever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render a thing radically different from that which was undertaken by the contract.

Question 10

What is the planet kids test for frustration?

Answer 10

1. Is the performance still possible?
2. Any potential hardships if frustrated?
3. Have the parties achieved their main objectives?
4. The terms
5. The matrix
6. The parties knowledge, expectations and contemplations, in particular as to risk, as at the time of contract…

Question 11

Does a multi-factorial approach mean the court has wide absolving power?

Answer 11

No. Court may need to exercise judgement but goal is to get justice.

Question 12

s 61 CCLA

Answer 12

All money paid before frustration is repayable, all money not yet paid under the contract no longer has to be paid.

Question 13

s 62 CCLA

Answer 13

• Court may allow party to recover expenses used
• Court discretion
• Shows how this doctrine is to promote justice

Question 14

s 63 CCLA

Answer 14

If A has received benefit before frustration due to the act of B, the court has discretion to award B the benefit.
- Court must have regard to expenses incurred by A
- Circumstances that required frustration

Question 15

Example of s 63 CCLA, courts awarding other party benefit?

Answer 15

Rayneon
- Contract found frustrated
- But dentist had already used sign for 2 years
- Dentist should not be able to recover payments made while using in during the 2 years
- Court would have discretion to order dentist to pay Rayneon to make it fair