frustration

Question 1

definition

Answer 1

where the contract becomes impossible to perform due to a frustrating event that was outside the parties control or contemplation// most contracts have a FORCE MAJEURE CLAUSE

Question 2

force majeure clause

Answer 2

excludes or limits liability for delay in performance or non performance if there are extraordinary events

Question 3

stage 1: explain and apply strict rule

Answer 3

You are always bound regardless of what happens PARADINE v JANE

Question 4

Stage 2: identify grounds for frustration:
impossibility of performance TAYLOR v CALDWELL

Answer 4

contract will be frustrated if contract is impossible to perform, if contract about a ‘thing’ and that gets destroyed (can also be for places)

Question 5

IOP side rule

Answer 5

in contract for services, frustrating event may be unavailability of the party providing the service ROBINSON V DAVIDSON

Question 6

subsequent illegality DENNY, MOTT & DICKINSON LTD

Answer 6

contract will be frustrated if a change in law makes the contract illegal to perform

Question 7

radical change in circumstances KRELL v HENRY

Answer 7

contract frustrated if essential commercial purpose of contract cannot be achieved, if contract based on particular event and event doesn’t happen

Question 8

stage 3: identify possible counter-arguments (if any of these apply breach will need to be applied)

Answer 8

self-induced frustration, contract becoming less profitable, foreseeable risk

Question 9

self induced frustration MARITIME NATIONAL FISH LTD v OCEAN TRAWLERS LTD

Answer 9

frustration won’t apply when frustrating event is within the control of one party

Question 10

contract becoming less profitable DAVIS CONTRACTORS LTD

Answer 10

contract becoming less profitable or more difficult to complete is not a reason for frustration

Question 11

foreseeable risk AMALGAMATED INVESTMENT v WALKER AND SONS

Answer 11

the event being a foreseeable risk or the event being mentioned in the contract will mean contract not frustrated

Question 12

Step 4: apply remedies

Answer 12

in common law remedy: frustrating event automatically terminates contract, any obligations already existed must be completed but future obligations are terminated

Question 13

Law reform (frustrated contracts) act 1943 S.1

Answer 13

1. money already paid is recoverable and money already due under the contract is not payable
2. court can order compensation to be paid for work done and expenses incurred under contract before frustrating event S.1(2)
3. court may order compensation to be paid for any valuable benefit one party may acquire under frustrated contracts S.1(3)

Question 14

stage 3: apply breach if counter arguments applied

Answer 14

full breach application