Law Reform (Frustrated Contracts) Act 1943

Question 1

Gamerco SA v ICM/ Fair Warning (Agency) Ltd [1995]

cancelled concert; both sides incurred expenses; s1(2) of Act

Answer 1

• both parties to a cancelled concert -> concert promoters and band -> had incurred expenses
• concert was cancelled
• court allowed the promoters to recover their advance payment, with no deduction to cover the band’s expenses
• The court will allow the defendant to bear its losses where the claimant’s losses greatly exceed its losses
• The court’s ‘task is to do justice in a situation which the parties had neither contemplated nor provided for, and to mitigate the possible harshness of allowing all loss to lie where it has fallen.’ (Garland J).
• basically, court has discretion to do what it wants about how much the parties receive as compensation

Question 2

BP Exploration Co (Libya) Ltd v Hunt (No 2) [1983]

expropriated oil fields; s1(3) of Act

Answer 2

• claimant did work on oil fields, incurring great loss
• Libyan government then expropriated the fields before the claimant had recovered their loss -> court held that government’s actions had frustrated the contract
• Court needed to calculate how much needed to be awarded to the claimant
• 2 stage test -> Goff J
  -> 1. identify and value the benefit conferred on B by A -> this acts as a ceiling to the award
  -> 2. assess the just sum to be awarded to A
• Under s1(3) Law Reform (Frustrated Contracts) Act 1943, the value of the benefit conferred is assessed based on the outcome, not the service itself, unless it is a contract for long-term repeated service