Frustration Flashcards
when does frustration occur
when an event makes the performance of the contract ‘radically different’ from what was originally agreed between the parties
what is frustration
when a contract has been made but before the contract completed an event (which is no fault of either party) occurs which makes completion of contract impossible
originally, contract law refused to take frustration into account, as in…
Paradine v Jane
more recently, the courts recognised this was unfair so developed…
the doctrine of frustration
what does the doctrine of frustration allow
in limited circumstances a party can escape from any further obligations
in what case was the concept of frustration first recognised in
Taylor v Caldwell
outline 4 situations frustration will operate in
1) impossibility
2) illegality
3) death/ incapacity
4) radical changes in circumstances
case for impossibility
Taylor v Caldwell
explain subsequent illegality with a case
contract may be frustrated if, due to a change in the law, purpose of contract becomes illegal - Denny, Mott & Dickson
explain 3) death/ incapacity with a case
case may be frustrated if their is death/ incapacity in the case of a contract for personal performances - Condor v Baron Knights (illness)
explain 4) radical changes in circumstances with 2 cases
if after creating the contract, the contract reason for the contract cannot take place then contract may be frustrated. Contract frustrated in Krell v Henry but not in Herne Bay Steamboat
outline 3 situations when frustration may not apply
1) self-induced frustration
2) less profitable/ more difficult to perform
3) ‘event’ = foreseeable risk/ referred to in contract
explain 1) self-induced frustration with a case
when frustration brought upon by the party making a claim - Maritime National Fish Ltd.
explain 2) less profitable/ more difficult to perform
if the contract has become less profitable or more difficult to perform, these reasons will not frustrate a contract - David Contractors Ltd.
what case states that if the ‘event’ is a foreseeable risk or referred to in the contract there will be no release from obligations
Amalgamated Investment v Walker Ltd.
a frustrating event automatically terminated the contract … when?
at the time of the frustrating event - existing obligations must be completed but future obligations terminated
what act covers what happens after a frustrating event has occurred
Law Reform (Frustrated Contracts) Act 1943
what section states that
•money already paid (e.g. deposit) is recoverable
•money already due under the contract (as in Chandler) is not payable
• court use discretion to order compensation for work done + expenses incurred under the contract before the frustrating event
s1(2)
what section states that the court may order compensation to be paid for any valuable benefits one party may acquire under the frustrated contract
s1(3)
what section states that, in estimating expenses incurred by any party, court includes any reasonable expenses (and give examples)
s1(4) - e.g. work/ services performed
