Discharge by Frustration Flashcards
(27 cards)
What is Frustration?
A device to set aside contracts where an unforeseen event renders contractual obligations impossible or radically changes the party’s principle purpose for entering into a contract
What is the legal principle in Taylor v Caldwell (1863)?
Contracts can become frustrated due to performance being impossible
When must frustration take place?
Between formation and performance
What 4 situations will cause a contract to become frustrated?
Impossibility
Illegality
Radical changes in circumstances
Frustration in specific situations (Leases and Employment Contracts)
What is impossibility?
Events which make performance impossible to occur
Taylor v Caldwell
What are the 2 other issues of impossibility?
Death of either party
Serious illness
What is the legal principle in Jackson v Union Marine Insurance Co Ltd (1874)?
There was an implied term so the long delay frustrated the contract
What is illegality?
If a law changes after a contract is made which makes performance illegal the contract will become frustrated
This often happens in wars
What is the legal principle in Metropolitan Water Board v Dick Kerr (1918)?
Work being completed in 6 years became impossible as the government ordered work to stop so the contract became frustrated
What is a radical change in circumstances?
The contract is frustrated when an event makes performance completely pointless but still technically possible
What is the legal principle in Krell v Henry (1903)?
Contracts can be frustrated when the purpose of the contract is pointless
What is the legal principle in Herne Bay Steam Boat Co v Hutton (1903)?
Contracts won’t be frustrated if a non-fundamental part of the contract is no longer possible
What is the legal principle in National Carriers Ltd v Panalpina (1980)?
If an interruption is temporary it will not amount to frustration
What is the legal principle in Robinson v Davidson (1871)?
The pianists illness was a frustrating event because the contract was conditional on her being well enough to perform
Condor v The Baron Knights (1966)?
Contracts can be frustrated if it’s necessary to have backups incase of a change in circumstances and you don’t
What is the legal principle in Tsakiroglou Co Ltd v Noblee Thorl Gmbh (1962)?
Contracts won’t be frustrated if it’s still possible to perform without damaging products or if performance becomes more onerous
What is the legal principle in Davis Contractors v Fareham UDC (1956)?
Contracts won’t be frustrated if there are insufficient grounds to make the contract impossible
What happens if self-induced frustration is found?
The contract will not be frustrated if the event is at the fault of one of the parties
What is the legal principle in Maritime National Fish v Ocean Trawlers (1935)?
Claims for frustration will fail if the event is self-induced
What is the legal principle in The Super Servant (1990)?
Contracts won’t be frustrated if a choice is made under the party’s control
What is a force majeure clause?
Often found in commercial contracts
Excludes liability for parties for delay if there are extraordinary events
If the contract doesn’t contain this clause it may be possible to rely on frustration to avoid a breach
What are the legal consequences of frustration?
Once a contract is frustrated it’s automatically terminated
It’s terminated from the point at which it was frustrated
The contract is discharged
Obligations no longer exist
If frustration is found…
The contract isn’t treated as if it didn’t exist
Acts before the event may have legal consequences
The contract is not treated as void ab initio
What are the Common Law consequences of frustration?
Advanced payments wouldn’t be recoverable
Payments due after wouldn’t be payable
