Frustration Flashcards
What is frustration
Contracts can be discharged when an unforeseen event makes performance impossible illegal or radically different from what was agreed
Illegal
Both parties are ready and willing to perform, but a change in the law prevents performance. This can be a change in the law in another country or the outbreak of war making a trade with a hostile country - Metropolitan water board v Dick Kerr
Impossibility
Contract ends in 1 of 4 ways
- Subject matter is destroyed - Taylor v Caldwell
- Subject matter is unavailable - Morgan v Manser
- One party dies
- There is a risk of contract being unable to be performed completely
Fundamentally different
Main purpose of contract is destroyed by a frustrating event
Development essentially and famously arose due to postponement of a coronation
The result of the frustration depends upon whether the commercial purpose of the contract is destroyed - Krell v Henry or if the purpose actually continued - Herne Bay steamboat co v Hutton
Limitations of frustration / Frustration does not apply when…
Certain limitations are imposed by courts in situations where it may be unfair to set aside the contract. These situations include:
The event was foreseeable or mentioned in the contract - amalgamated investment v John Walker
The event was self induced - Maritime National fish v Ocean Trawlers
Contract is more difficult or expensive but still possible - Davis contractors v Fareham UDC
Law reform (frustrated contracts) Act 1943
Created to address some of the unfairness developed through common law
- Any money paid before frustration is recoverable
- Only money payable before the frustration is no longer payable
- Expenses - if occurred payment can be ordered by court
- If any valuable benefit occurred then payment may be ordered by court
Metropolitan water board v Dick Kerr
Applied the doctrine of frustration, which allows a contract to be discharged when unforeseen events render its performance impossible from what was initially agreed upon.
Taylor v Caldwell
Parties are released from their contractual obligations when the subject matter essential to the contract’s performance is destroyed without fault of either party, making performance impossible
Morgan v Manser
Contract for personal service can be frustrated when the performer is called up for compulsory military service
Krell v Henry
Contracts can be discharged if unforeseen events fundamentally undermine their foundational purpose, even if performance remains technically possible
Herne Bay steamboat co v Hutton
The contract was not frustrated, as the primary purpose of the agreement—hiring a steamboat—remained possible despite the event’s cancellation
Amalgamated investment v John Walker
Contract will not be frustrated if the complaining party implicitly assumed the risk of an unforeseen event arising after the contract’s formation
Maritime National fish v Ocean Trawlers
A party cannot rely on frustration as a defence if their own actions or choices directly caused the event rendering performance impossible
Davis contractors v Fareham UDC
A contract is not frustrated merely because performance becomes more onerous, time-consuming, or costly than originally anticipated.
