Discharge by frustration

Question 1

What is the old (strict) rule?

Answer 1

A party was bound to perform their contractual obligations even if an intervening event made it impossible
Paradine v Jane

Question 2

What happened in Paradine v Jane?

Answer 2

D forced to pay rent even though they couldn’t live in property as army made them leave

Question 3

What is the current law on frustration?

Answer 3

Frustration occurs if there’s an unforeseeable intervening event which means contract can no longer be performed

Question 4

What happened if a contract is frustrated?

Answer 4

Contract ends

Question 5

What can’t either party do if a contract is frustrated?

Answer 5

Can’t sue for breach of contract
Don’t have to fulfil contractual duty

Question 6

What is a ‘force majeure clause’?

Answer 6

Excludes liability for non-performance if there’s an extroardinary even, no remedy available

Question 7

What are the different types of frustrated contracts?

Answer 7

Impossible to complete
Illegal to complete
Radical change

Question 8

What does it mean if a contract is impossible to complete?

Answer 8

Subject matter is destroyed
Subject matter is unavailable
Person is unavailable

Question 9

What happened in Taylor v Caldwell?

Answer 9

Music hall hired for an event and burnt down before even took place
Contract frustrated and hirer couldn’t get his costs back as hall was destroyed

Question 10

What happened in Jackson v Union Marine Insurance?

Answer 10

Contract was frustrated because ship was unavailable

Question 11

What happened in Condor v The Baron Knights?

Answer 11

Drummer of band became ill, contract became frustrated

Question 12

What does it mean if the contract is illegal to perform?

Answer 12

Contract is illegal to perform so contract is frustrated

Question 13

What happened in Denny, Mott v Fraser?

Answer 13

Importing certain types of timber became illegal so contract was frustrated

Question 14

What does radical change mean?

Answer 14

If main purpose of contract is based on a particular event and event can’t take place, contract may be frustrated

Question 15

What happened in Krell v Henry?

Answer 15

Hotel room booked for King’s coronation, was postponed, so contract was frustrated

Question 16

When can’t frustration apply?

Answer 16

If self - induced
Contract is less profitable/more difficult to do
Even was foreseeable/mentioned in contract

Question 17

What happened in Maritime National Fish v Ocean Trawlers?

Answer 17

Contract not frustrated, could have used one license for hired boat
Event was self-induced

Question 18

What does it mean if it is less profitable?

Answer 18

Contract not frustrated if event is less profitable or more difficult to complete

Question 19

What happened in Davis Contractors v Fareham?

Answer 19

Contract wasn’t frustrated when price of materials increased beyond what was anticipated

Question 20

What happens if a party doesn’t complete contract because it is less profitable?

Answer 20

They will be in breach of contract

Question 21

What happens if the risk is foreseeable?

Answer 21

Contract won’t be frustrated

Question 22

What happened in Amalgamated Investment & Property Co v John Walker?

Answer 22

Old building was listed
Reasonably foreseeable that an old building will be listed so contract was not frustrated

Question 23

What are some remedies under common law discharge by frustration?

Answer 23

Contract is automatically terminated
Future obligations don’t have to be fulfilled
Anything already done/paid is lost

Question 24

What case is Chandler v Webster similar to?

Answer 24

Krell v Henry

Question 25

What are some statute remedies for discharge by frustration?

Answer 25

Law Reform Act 1943:
Money already paid such as a deposit is recoverable
Any money that should be paid under contract doesn’t have to be paid
Court can use discretion and order compensation to be paid
Compensation can be given for any valuable benefit one party may acquire under frustrated contract