LAWS1015 Lecture 12

Question 1

(White & Carter Councils v McGregor)

Answer 1

P: party not under an obligation to terminate no matter how unreasonable it is. May elect to continue performance following repudiation, and thus earn a right to payment of contract price.

1. only if performance does not require the cooperation of the other party
2. innocent party has a legitimate interest in performing the contract

Question 2

(Tropical Traders v Goonan)

Answer 2

P: by affirming the contract, party loses the right to terminate for that particular event, but can still terminate if further event gives another right to terminate, and does not lose the right to damages for prior breaches.

F: mere extension of time does not amount to affirmation

e. g. accept or insists upon receiving performance
e. g. requests reduction in price on basis of other’s breach
e. g. continues to perform own acts

Question 3

(Rawson v Hobbs)

Answer 3

P: party who relies on invalid ground in terminating, can rely on any other valid ground to justify termination even if it wasn’t known to party at the time

Question 4

(Legione v Hateley)

Answer 4

P: party may be estopped from excercizing right to terminate if representation which induced assumption

F: unreasonable rely on secretary’s representation because she made it clear that she had no authority

Question 5

(Siloh Spinners v Harding)

Answer 5

P: Equity will relieve against the forfeitrue of the money in some circumstances

F: built house, rental payments retained, with an adjustment for period of occupation

Question 6

(Barrak Corporation v Jaswil Properties)

Answer 6

P: to be entitled to terminate, party must itself be ready willing and able to perform. (unless it was a express right within the agreement)

Question 7

(McDonald v Dennys Lascelles)

Answer 7

P: right to deposit is dependent on party in breach.

P: does not have right to retain deposit if there has been a total failure of consideration (e.g. for entire contracts)

Question 8

(Bot v Ristevski)

Answer 8

P: whether there is an unconditional right to recover and retain deposits? question of construction

Question 9

(Shevill v Builder’s Licensing Board)

Answer 9

P: lessor terminates, cannot sue for remainder of lease. Common law principle that parties have duty to mitigate loss.

Question 10

(Codelfa)

Answer 10

T: whether the situation resulting from the frustrated event is fundamentally different from what was contemplated by the contract, on its true construction in light of the surrounding circumstances?

1st: work out performance obligations!
2nd: performance literally impossible, commercially unfeasible, illegal, destruction of subject matter (Taylor v Cadwell), disappearance of basis of contract (Krell v Henry), state of affairs essential to performance (Codelfa)

P: just because contract cannot be performed as expected, does not equate to frustration e.g. availability of the land for the purchasers proposed purpose was not a term of the contract

P: cannot rely on self-induced frustration to discharge themselves from performance

P: neither party needs to elect to terminate, automatically discharged. Party not liable for failing to perform. Party performing not entitled to contract price, can only claim reasonable remuneration under the quantum meruit basis.

P: accrued rights remain enforceable (e.g. right to contractual price for divisible contracts). Damages for breach may be reduced to take account of the fact that contract has been frustrated.

Question 11

(Krell v Henry)

Answer 11

F: having regard to surrounding circumstances, common understanding was that the coronation was the foundation of the contract.

Question 12

(Bank Line v Arthur Capel)

Answer 12

P: question of construction whether express terms of contract are wide enough to cover frustrating event - so as to preclude doctrine of frustration from applying.

P: where express term allocating the risk, court cannot provide another alternative.

Question 13

(Davis Contractor v Fareham)

Answer 13

P: whether frustrating event (or its extent) was reasonably foreseeable at the time of making contract?

P: if it is, then it is presumed that parties have implicitly allocated the risk on a “loss lies where it falls” basis.

F: increased costs due to bad weather, shortage of labor and materials. foreseeable. And by agreeing to a lump sum payment, builder was taking the risk of the cost being greater or less than expected.

Question 14

Frustrated Contracts Act s10

Answer 14

s10: if party has fully performed, must be paid contractual price

Question 15

Frustrated Contracts Act s11(2)

Answer 15

s11(2)(a): partial performance, must be paid amount equal to attributable value of performance (unless attributable value exceeds attributable cost

s11(2)(b): sum of attributable value + 1/2 of the difference between attributable value and attributable cost

Question 16

Frustrated Contracts Act s12

Answer 16

s12: requires the return of money paid before the contract was frustrated

Question 17

Frustrated Contracts Act s13

Answer 17

s13: expense incurred for the prupose of performance, loss is to be shared equally

Question 18

Frustrated Contracts Act s15

Answer 18

s15: court has discretion to exclude operation of these adjustment provisions if it would cause “manifest injustice” or “excessively difficult or expensive”

Question 19

(Fibrosa)

Answer 19

P: money paid (e.g. deposits, instalments) will not required to be repaid unless there is a total failure of consideration

P: mere fact that party has incurred expenses in preparing to perform does not prevent there being a total failure of consideration

F: entire contract, ship not delivered, but expenses incurred in manufacture

Question 20

(Baltic Shipping)

Answer 20

P: although there was incomplete performance, party was still on the cruise for 3 days, not failure of consideration.