Cotract Law Flashcards
What does Frustration deal with ?
Deals with whether radically changed circumstances can relieve parties of there Contractual obligations
Problem that frustration poses ?
Sanctity of contract ie still bound even if bad bargain vs events that make performance very different from what was expected
Arnold v Britain 2016 case facts and judgment
Times of high inflation
Term said service charge could be increased 10% each year
Term was still binding even when inflation slumped
Krell v Henry 1903 case facts and judgment
D agreed to hire c flat for 2 days not including overnight stay
Was to see the coronation of king Edward pass
Agreed sum of £75 with £25 paid in advance
Balance due on first day
Coronation cancelled and c sued for balance
Vaughan Williams at court of appeal said if particular state of thing needed to create foundation of contract and it is removed then frustrated
D not liable for balance but cannot reclaim 50 either as before frustrating event
Herne bay steamboat v Hutton 1903 case facts and judgment
D contracted to hire Cs steamboat cynthia for 2 days
D intended to sell tickets for trips to see naval review marking edwards coronation and to tour fleet at Spithead
D paid 50 in advance and 200 was due when boat left herne bay
Naval review cancelled when coronation cancelled
D no longer wanted ship
C claimed balance and d counter claimed return of 50
Same judges in krell however c could claim because distinguished from krell
Naval review not foundation could stilll see spit head
Davis v fareham udc 1956 case facts and judgment
C contracted to build 78 houses
C suffered delays because of shortage of skilled labour
Work tool 22 months instead of 8
C incurred costs and claimed frustration by shortage of skilled labour
Sought additional money on basis of quantum Meruit claim
Contract was frustrated and no room for quantum meruit mad matter of payment was dealt with in contract
Did not approve implied term in Taylor
The 3 board categories for frustration
1) where performance of some part of contract is literally impossible eg because of destruction of subject matter like music hall in Taylor but unlikely where only impractical or more costly like in David
2) where performance is possible and practical but the commercial purpose has been completely removed ie krell v Henry - these are rare
3) where performance is illegal ie fibrosa case
The sea angel case 2007 facts and judgment
Chartered the sea angel
Sea angel was held at ports as part of dispute over oil spill ; compensation
C claimed for extended period through off hire clause in contract
D said contract was frustrated because inability to leave port
Held contract not frustrated as performance not radically different
Ship being held at port was forseeable risk and off hire clause indicated d had carried this risk
Lots to take into account , multi factorial approach
Taylor v Caldwell 1863
C agreed to hire from D a music hall
Hall destroyed by fire
C claimed d was in breach and claimed preparation costs for events
Held implied term in contract that the foundation of contract was continued existence of music hall and that parties would be excused if ceased to exist
Consequences of frustration
1) brings contract to end automatically ie no party has option to continue which is different to breach of contract as innocent party could continue if want to
2) whole contract discharged - not just part of
3) contract cannot be temporarily frustrated - bank of New York Mellon v cine uk ltd 2021 - covid case
Frustrated contracts act 1943
All sums paid before frustrating event can be recovered ie 25 in krell but court may decide that some can be retained to cover expenses
All sums due but unpaid at time of event cease to be payable
Effectively act allows court to reach in and adjust the position as seems just in the circumstances
Davis v Fareham 1956
C contracted to build 78 houses
C suffered delays because of shortage of skilled labour
Work took 22 months instead of 8
Incurred large costs therefore claimed contract frustrated by shortage of labour and sought additional money on basis of quantum meriut claim
Contract was not frustrated and no room for quantum meruit as the matter of payment was dealt with in contract
Did not approve implied term basis in Taylor
Limits on frustration
If contract provides how event will be handled then that will take effect and contract will not be frustrated - Canary Wharf v European Medicines Agency 2019
Force majeur clause which says that certain terms of contract seize to bind under certain circumstances like strikes etc
Parties negligence
Self induced
Have the courts solved the dilemma ?
Radically different test in Davis used to limit frustration to cases that are truly exceptional
In large majority of cases the contract will be treated as allocating the risk and will be enforced - Canary Wharf
Controversy remains about how line should be drawn - there is no simple tile that can be applied in the grey area - whether it depends on a multifactorial approach, or construction of the contract, the decision seems to depend on a very detailed assessment of the evidence
Paradine v Jane 1646
Before doctrine of frustration
Still liable for rent even though expelled from land .
Change in circumstances did not matter
Canary Wharf v European Medicines Agency 2019
25 year lease of premises granted to European Medicines Agency
Agency needed to move headquarters to Amsterdam
Agency claimed lease frustrated on illegality and common purpose like in krell v Henry
First ground rejected as not illegal to remain in London
Applied radically different test in Davis and multi factorial approach in sea angel
Held not like krell and contract provided what should happen
What is an actionable misrepresentation
A pre contractual false statement of material fact , made either orally, in writing or by conduct , that induces a party to enter into a contract with the party making the representation
Misrep is a vitiating factor
Set aside
Remedy of recision is for misrep
What is difference between recision and termination
Recision - putting parties into position they were before contract was formed
Termination - releases parties from any further obligations ; does not provide for undoing of obligations already performed
Derry v peek 1889 - fraud is proved …
1) when it is shown that false representation has been made knowingly or
2) without belief in its truth or
3) recklessly , careless whether it be true or not
Does Derry v peak include negligent misrepresentation
