Frustration

Question 0

Amalgamated Investment v John Walker [1977] 1 WLR 164

Answer 0

The Secretary of State wrote a letter saying the building was listed a day after the sale, therefore not to be dealt with in mistake but frustration. The supervening event had occurred after the contract was formed.

Question 1

Davis Contractors Ltd v Fareham UDC [1956] AC 696

Answer 1

“Frustration occurs whenever the law recognises that without the fault of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract” Lord Radcliffe

Question 2

Paradine v Jane (1647) Aleyn 26

Answer 2

Traditionally no scope for frustration, a supervening event cannot be an excuse for non performance

Question 3

Taylor v Caldwell (1863) 3 B&S 826

Answer 3

Initial principle of frustration introduced.

The contract was frustrated because it was impossible to perform it and the fire was without the fault if either party.

Question 4

Edwinton Commerical Corp v Tsavliris Russ (The Sea Angel) [2007] EWCA Civ 547

Answer 4

Rix LJ’s multi factorial approach:

• terms of the contract itself
• context
• the parties’ knowledge, expectations, assumptions and contemplations at the time of the contract
• risk allocation
• the nature of the supervening event
• reasonable calculations of the possibility of future performance
• must make radically different

Question 5

J Lauritzen AS v Wijismuller BV, (The Super Servant Two) [1990] 1 Lloyd’s Rep 1 (CA)

Answer 5

Bingham LJ’s approach: *useful for essays, page 62
(1) Just and reasonable test
(2) Narrow limits
(3) Brings the contract to an end
(4) Must be some outside event or extraneous change of situation
(5) Must take place without blame or fault on the side of the party seeking to rely on it.
Self induced frustration due to allocation of contracts. They wanted the benefits of a high risk organisation so had to be ready for the drawbacks.

Question 6

Denny Mott & Dickinson v Jas B Fraser [1944] AC 265

Answer 6

Contract to buy timber also included option to purchase the timber yard in the future. The option to buy timber was frustrated by the War Time Control Order. It was ruled by the court that the contract should be taken as a whole so the option to purchase was void.

Question 7

Marshall v Harland & Wolff [1972] 1 WLR 889

Answer 7

The test is whether the employee’s incapacity due to their illness is of such a nature and is likely to continue for such a period that further performance of his or her obligations under that contract becomes either impossible or radically different from that undertaken

Question 8

Law Reforms (Frustrated Contracts) Act 1943 section 1(3)

Answer 8

Means that even in cases of reward for whole contract as in Appleby v Myers (1867) some kind of remedy would be provided

Question 9

Jackson v Union Marine (1874) LR 10 CP 125

Answer 9

Ship delayed by 7 months on way to San Francisco. Frustrated as this did make the contract radically different as both parties understood the cargo should be delivered within a reasonable time.
When both parties should have been able to see the event then there should not be frustration.

Question 10

Krell v Henry [1903] 2 KB 740

Answer 10

Example of frustration of adventure, loss of commercial object.
Room in king’s procession, both parties understood that was the purpose. Was frustrated when king fell ill. Criticised as contract can still be literally performed.

Question 11

Berne Bay Steam Boat Co v Hutton [1903] 2 KB 683

Answer 11

This coronation case involving shipping didn’t become frustrated. Most the commercial object was lost but the fleet still remained anchored.

Question 12

Davis Contractors Ltd v Fareham UDC [1956] AC 696

Answer 12

The frustration doctrine is limited.

Question 13

Tatem v Gamboa [1939] 1 KB 132

Answer 13

Ship captured by enemy forces, the contract was frustrated despite this being an obvious risk.

Question 14

The Eugenia [1964] 2 QB 226

Answer 14

Dictum suggesting that foreseeable events can still frustrate the contract.
In this case the contract was not frustrated despite not being able to use the canal, as it just meant using a more inconvenient and expensive route.
There may have been frustration if there was a specific delivery date or if the goods where perishable.

Question 15

Metropolitan Water Board v Dick Kerr [1918] AC 119

Answer 15

Contract to construct reservoir within 6 years, contained clause allowing for delays “how so ever occasioned”. Emergency war time legislation meant the constructors had to stop and sell their plant.
It was ruled that the contract was frustrated and the clause did not cover it, as it was designed to protect from liability and not frustration. The disruption vitally and fundamentally changed the conditions of the contract.

Question 16

Maritime Fish v Ocean Trawlers [1935] AC 524

Answer 16

Several boats and not enough licenses granted - self induced frustration.

Question 17

Cricklewood v Leighton’s [1945] AC 221

Answer 17

Purchase of a 99 year lease to build shops. WWII meant couldn’t build shops. Purpose of land no longer remains. Not frustrated as only 9 years out of 99 where purpose couldn’t be fulfilled. Dicta suggests could be frustrated if a short lease.

Question 18

National Carriers v Panalpina [1981] AC 675

Answer 18

10 year lease of warehouse, main access route closed for 20 months. The tenants bore the risk that the tenancy might be disrupted in this way. Lord Wilberforce felt there was no general principle regarding tenancy and frustration.

Question 19

Fibrosis v Fairbairn [1943] AC 32

Answer 19

Polish company wanted to buy machine, paid £1000 but where occupied by German forces. They were able to recover the £1000 as consideration had totally failed.
Problems:
1. English company had incurred costs for building a machine which was totally pointless (should damages have been paid?)
2. It had to be a total failure of consideration, do receiving a tiny part, no matter how small, would mean they couldn’t get their money back

Question 20

Law Reform (Frustrated Contracts) Act 1943

Answer 20

Details on page 68

Question 21

BP v Hunt (No 2) [1979] 1 WLR 783

Answer 21

A party who has gained a valuable benefit may be required to pay a just same for it, irrespective of whether anything was paid or payable, as derived from section 1(3). Goff created 2 stage test (1) identify and value the benefit, (2) asses what some is considered just to award the party.

Question 22

Gamerco v ICM [1995] 1 WLR 1226

Answer 22

Garland considered that there were 3 methods how the courts should exercise their discretion:

1. Allow the party, having undertaken the work, to incur all the expenses incurred
2. An equal division of the costs
3. A broad discretion to do what the courts considered to be just, having regard to all the circumstances of the case *generally accepted approach