OCR A-LEVEL LAW - Contract (Discharges) - frustration

Davis Contractors v Farnham UDC

Frustration occurs whenever the law recognises that without the default of either party, a contractual obligation has become incapable of being performed because circumstances would render it radically different from that which was undertaken by the contract

a contract becoming more difficult or less profitable does not mean it’s frustrated

Paradine v Jane

a party who fails to fulfil his contractual obligations is liable in damages even though performance has become impossible

Taylor v Caldwell

Party isn't liable for a breach of contract if the party is prevented from keeping a promise due to an unforeseeable intervening event (a fire destroying the venue)

Majeure clause

Excludes liability for delay or non-performance in extraordinary events

Jackson v Union Marine

frustration applies where subject matter becomes unavailable through no fault of the contracting parties

Condor v Baron Knights

frustration occurs where a party becomes seriously ill

illness made contractual obligations impossible to be carried out

Notcutt v Universal Equipment

death can frustrate a contract

Krell v Henry

frustration can occur where an event is supposed to occur but can’t due to a radical change in circumstances

flat hired to watch coronation but was cancelled so contract frustrated as cancellation deprived flat of its commercial value

Herne Bay Steamboat Co v Hutton

ship hired for passengers to watch coronation and go on day cruise, coronation cancelled

not deprived of sole purpose of contract as still went on day cruise so was not frustrated

the Fibrosa case

where performance of contract becomes illegal the contract will be frustrated

war broke out so international trading couldn’t take place and was made illegal

When can frustration not apply?

- Self-induced frustration
- Contract becomes less profitable
- Event being a foreseeable risk or one that was mentioned in contract

Self-induced frustration

Maritime National Fish v Ocean Trawlers = Frustration doesn't apply when the frustrating event is within the control of one party

Gamerco case - stadium license being taken away by gov was out of control of both parties so wasn’t self induced and was frustrated

Less profitable

Davis Contractors v Farnham UDC = Contract isn't frustrated just because it becomes more expensive or difficult to perform

Tsakiroglou v Noblee = If the reasonable alternative is available but more expensive or more difficult then not frustrated

forseeable event

amalgamated investment v John Walker

where risk listed in contract (event was reasonably forseeable) courts are reluctant to find frustration

for event to be frustrating it has to be outside what parties could reasonably have foreseen as being possible - Armchair v People in mind

Law Reform (Frustrated Contracts) Act 1943

Applies to all contracts apart from:
- Charter parties and contracts of carriage of goods by sea
- Contracts of insurance
- Contracts for sale of specific goods where goods have been perished
(Common law would apply)

S1(2)

- Money paid before the frustrating event is recoverable

-expenses can be taken away from the damages (S1(4))

S1(3)

where one party has obtained valuable benefit from the contract before frustrating event then the court may order them to pay a sum on a quantum meruit basis

in order to fairly compensate the claimant

S1(4)

when estimating expenses incurred by any party to the contract the court should consider

-overhead expenses

-any work or services performed a personally by a [arty to the contract