Discharge of Obligations

What is frustration in contract law?

A supervening event after formation that makes performance impossible or radically different.

What is the key test for frustration?

Whether the obligation has become “radically different” from what was agreed.

Why is frustration considered a narrow doctrine?

Because mere difficulty, delay, or expense is insufficient—there must be a fundamental change.

How does frustration differ from mistake?

Mistake concerns facts at formation; frustration concerns events after formation.

What is the role of risk allocation in frustration?

If the contract allocates risk (expressly or impliedly), frustration will not apply.

What is the rule from Amalgamated Investment v John Walker?

If the contract can still be performed as agreed, it is not frustrated—even if less profitable.

What is the effect of frustration on a contract?

The contract is automatically discharged from the point of the frustrating event.

What happens to obligations after frustration?

Future obligations end; accrued obligations remain enforceable.

What rule was established in Taylor v Caldwell?

If performance depends on a specific thing that ceases to exist, the contract is frustrated.

What is the modern test from Davis Contractors v Fareham UDC?

Frustration occurs when performance becomes radically different, not merely more onerous.

When does illegality frustrate a contract?

When performance becomes unlawful after formation.

What does Metropolitan Water Board v Dick Kerr establish?

Government intervention making performance illegal can frustrate a contract.

When does destruction lead to frustration?

When a specific subject matter essential to performance is destroyed.

What is the rule for non-specific goods (CTI v Transclear)?

No frustration if goods can be sourced elsewhere.

When does delay frustrate a contract?

Only if it is so serious that it changes the nature of the obligation

What does Tsakiroglou v Noblee Thorl show?

Increased expense or inconvenience does not amount to frustration.

What does Jackson v Union Marine Insurance show?

Extreme delay that changes the commercial purpose can frustrate a contract.

When does incapacity frustrate a contract?

In personal service contracts where performance depends on the individual.

What is frustration of purpose?

Where the main purpose of the contract is destroyed by an event.

What is the rule from Krell v Henry?

If the contract’s foundation (main purpose) fails, the contract is frustrated.

What does Herne Bay Steam Boat v Hutton show?

No frustration if a substantial part of the contract can still be performed.

Can leases be frustrated?

: Yes, but only in rare and exceptional circumstances.

What is self-induced frustration?

Where the party relying on frustration caused the event.

What is the rule from Maritime National Fish?

A party cannot rely on frustration if they had a choice and caused the problem.

Does negligence prevent frustration?

Yes—if the event was caused by fault, frustration will not apply.

What is the effect of foreseeability?

If the event was foreseeable or provided for, frustration is unlikely.

What was the rule in Chandler v Webster?

Money paid is not recoverable; money due remains payable (harsh rule).

How did Fibrosa modify this?

Money is recoverable where there is a total failure of consideration.

What does s1(2) provide? In law reform act 1943

Money paid is recoverable; money payable is no longer due, subject to expenses.

What does s1(3) provide? in the law reform act 1943

Courts may award a “just sum” for any valuable benefit received.

What is the key principle under the law reform 1943 Act?

Fairness and prevention of unjust enrichment.

What is the role of force majeure clauses?

They allocate risk contractually, often excluding the need for frustration.

What happens if a force majeure clause applies?

The contract governs—frustration will not be used.

When is the defendant not liable due to claimant fault?

When the claimant’s actions are the dominant cause of the loss.

What does Quinn v Burch Brothers establish?

An intervening act by the claimant can break the chain of causation.

When can damages be reduced?

Where both parties are at fault under the 1945 Act.

When does contributory negligence NOT apply?

In strict liability contractual obligations.

What does Forsikrings Vesta v Butcher establish?

Contributory negligence applies to care-based contractual duties.

What is the difference between liquidated damages and penalties?

Liquidated damages are enforceable; penalties are not.

What is the modern test from Cavendish v Makdessi?

Whether the clause is disproportionate to the innocent party’s legitimate interest.

What are Lord Dunedin’s indicators of a penalty?

Extravagant sum, greater than debt, single sum for varied breaches.

What is the modern approach to penalty clauses?

Focus on legitimate interest and proportionality, not strict rules.

What is the overarching principle behind frustration and related doctrines?

The law balances fairness, risk allocation, and contractual certainty—intervening only in exceptional cases.

In Arcos Ltd v Ronaasen, when can a buyer reject goods despite trivial defects?

Where a contractual term is a condition, strict compliance is required—any deviation (even trivial) entitles the buyer to reject.

What does Re Moore & Co v Landauer establish about packaging terms?

Packaging requirements can be conditions, meaning incorrect packaging alone can justify rejection of the whole consignment.

When does Hoenig v Isaacs allow payment despite defective performance?

Where there is substantial performance, the claimant can recover the contract price minus the cost of defects.

Why was there no recovery in Bolton v Mahadeva?

The defects were so serious that there was no substantial performance, so no payment was due at all.

What strict rule was established in Paradine v Jane?

Contractual obligations are absolute, and parties remain liable despite unforeseen events.

When will delay frustrate a contract according to The Puerto Buitrago?

Only where the delay is so serious that it fundamentally alters the nature of the obligation—mere delay is insufficient.

When can a party affirm a contract and claim the full price in White & Carter v McGregor?

Where the innocent party can perform without cooperation from the other party and has a legitimate interest in doing so.

What principle emerges from MSC v Cottonex regarding frustration and commercial reality?

Where performance becomes commercially pointless, the contract may effectively end, reflecting a “frustration-like” limitation based on reasonableness.

What is the key function of the Law Reform (Frustrated Contracts) Act 1943?

To mitigate the harshness of common law by:

• Allowing recovery of money paid (s1(2))

• Cancelling future payments

• Awarding a “just sum” for benefits conferred (s1(3))

How do strict performance, substantial performance, and frustration interact in contract law?

• Strict performance (Arcos, Re Moore) → exact compliance required

• Substantial performance (Hoenig, Bolton) → partial recovery depending on defects

• Frustration → contract discharged only where performance becomes radically different
  👉 Together, they show a spectrum from strict enforcement → flexibility → discharge