Frustration

Question 1

Introduction to Frustration

Answer 1

• Purpose of contract is frustrated
  
  • Some similarities to the doctrine of mistake
• Parties are discharged from Performance
• Historically courts took rigid view
  
  • Paradine v Jane - Leased land occupied
• Subsequently courts established the doctrine of frustration
  
  • Taylor v Caldwell (Music Hall fire)
  • Krell v Henry (Rooms to view coronation)

Question 2

Test of Frustration

Answer 2

• Radical change in obligation test (Objective)

Test formulated in Davis Contractors v Fareham

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

It is not hardship or inconvenience or material loss itself whoch calls the principle into play. There must be as well such a change in the signficance of the obligation that the thing undertaken would, if, performed, be a different things from that contracted for

Question 3

Test of Frustration

Answer 3

• Without default of either party
  
  • Maritime Nationale Fish Ltd. v Ocean Trawlers Ltd
    
    • Failure to obtain licence
  • Lauritzen AS v Wijsmuller
    
    • Choice of two ships
• Contractual obligation is incapable of being performed, because of a radical change in the circumstances
  
  • Krell v Henry - Kings Coronation
  • The Fibrosa Case - Export to Poland during the war
  • Pioneer Shipping v BTP Tioxide - Strike at sea
• Every hardship, inconvenience or material does not attract the doctrine of frustration / only frustration if things undertake would, if performed, be a different thing from that contracted for
  
  • Ocean Tramp Tankers Corp v V/O Sovfracht “The Eugenia”
• Suez canal closed -> Longer route is not a frustration, alternatives
  
  • British Movietonews Ltd v London and District Cinemas
• Short news-reels for cinemas not in demand after War ended -> No frustration
  
  • Davis Contractors v Fareham
• Delay in building houses -> It was not impossible nor totally different -> No frustration

Question 4

Categories of Frustration

Answer 4

• Subject matter is destroyed or ceases to exist
  
  • Taylor v Caldwell - Burned down music hall
• Frustration of purpose
  
  • Krell v Henry - Coronation case
• Incapacity or death
  
  • Robinson v Davison - Sick Piano Player
• Frustration by change in law
  
  • Baily v DeCrespigny - Train line
  • Denny, Mott & Dickson v James B Fraser - Control of timber
• Frustration by delay
  
  • Pioneer Shipping v BTP Tioxide
    Temporary Impossiblity may frustrate a contract where eventual performance would be radically different from that originally envisaged. Pioneer Shipping v BTP Tioxide where a charter body was contracted to make 6 voyages within 9 months but this was halved due to a strike at the port therefore although performance was possible it just wasn’t what they originally contracted for.

Question 5

Legal effect of frustration

Answer 5

• Historical loss “Lay where it fell”
  
  • Chandler v Webster (1904) - Coronation
• Later amended to make recovery of money allowable
  
  • Fibrosa case
  • But only applicable where there is a total failure of consideration
• Some jurisdiction have statutes in place to allow recovery, including expenses incurred before frustrated event

Question 6

Summary

Answer 6

• Doctrine of frustration established in Taylor v Caldwell
• Radical change in obligation test Davis Contractors v Fareham
  
  • No fault of either party
  • Radical change in circumstances
  • Radical change in obligation
• Five categories of frustration
• Recovery of money allowable