Discharge of Contract Flashcards
(41 cards)
By what 4 ways can a contract end?
- By Performance
- By Agreement
- By Breach
- By Frustration
What does it mean when a contract is ended by performance?
When contractual obligations are performed
What does it mean when a contract is ended by agreement?
When parties to a contract agree to end it?
What does it mean when a contract is ended by breach?
When a party fails or refuses to perform his/her obligations under a contract
What does it mean when a contract is ended by frustration?
When a frustrating event occurs after the contract is formed that makes the performance of that contract impossible of illegal
What is ‘frustration’?
Describe its’ width of application?
The doctrine of frustration is applied when performance of a contract is impossible, illegal, or radically different from that which was originally agreed, when a frustrating event happens after the contract is made
Very narrow doctrine, ‘impossible’ means literally that, and cases are often of an exceptional nature
Historically, what was the courts attitude toward ‘frustration’?
Historically a strict approach, courts not wiling to allow a party to escape contractual obligations due to frustrating events
- Instead parties were allowed to use ‘hardship clauses’
How has the courts attitude to ‘frustration’ changed over time and why?
Became less strict, and began to apply the doctrine through process of implication: Taylor v Caldwell [1863], Taylor approach rejected in Davis Contractors Ltd v Fareham UDC [1956]
What modern test for frustration was laid out in Davis Contractors v Fareham UDC [1956]
- The court said that ‘frustration occurs where to require performance would be to require something radically different from what was undertaken’
- Not enough to argue that performance has turned out to be difficult/extremely difficult
What modern test for frustration was laid out in National Carriers v Panalpina [1981]?
The court said we must ask if there ‘supervervens an event which significantly changes the nature of the outstanding contractual rights… then it would be unjust to hold the parties to them’
What is the significance of the Davis Contractors case?
It established that courts will not regard an event as frustrating ,merely if and when performance of contract becomes onerous and expensive
Give 5 examples of frustrating events
- Destruction of the Subject matter
- Death or incapacity
- Legal impossibility
- Government interference or delay
- Whole commercial purpose of the contract has changed
What case establishes destruction of subject matter as ground for frustration of contract?
Taylor v caldwell
not in Bunge v Kyla [2012] as damaged ship was insured
What case establishes death or incapacity as grounds for frustration of contract?
Condor v Barron Knights [1966]
BUT
If someone has fluctuating capacity, the courts may not regard the contract to be discharged for frustration - Blankley v Central Manchester [2015]
What case establishes legal impossibility as grounds for frustration of contract?
Courts may hold a contract frustrated if contract becomes illegal to perform
- E.g. due to change in law/outbreak of war = Avery v Bowden [1855] (Crimean War)
What case establishes Government interference or delay as grounds for frustration of contract?
Metropolitan Water Board v Dick Kerr [1918]
House of Lords held that the restriction imposed by the ministry of munitions was indefinite, which made the performance of the contract impossible
Give an example of ‘the whole commercial purpose of the contract changing’ as an example of a frustrating event
What two cases demonstrate a contracted frustrated, and one not
E.g. cancellation of an event on which the contract is based
Krell v Henry [1903] - coronation procession case - contract frustrated
Herne Bay Steam Boat Co. v Hutton [1903] - Royal fleet case - NO frustration because no complete failure of its’ purpose
What is self-induced frustration as a limitation on the doctrine of frustration?
A contract can be discharged only if a frustrating event is not attributable to the fault of a party that relies on frustration
What are express provisions in a contract as a limitation on the doctrine of frustration?
If a contract makes clear what happens if a particular, supervening event occurs, then the doctrine of frustration will not be applied (Fibrosa Case [1943] )
What case establishes ‘foreseeability of a frustrating event’ as a limitation on the doctrine of frustration?
Amalgamated Investment v John Walker [1977]
What case establishes ‘more difficult/costly to perform’ as a limitation on the doctrine of frustration?
David Contractors v Faveham [1956]
List the 4 common law effects of frustration
- A frustrated contract is automatically discharged: the contract ends
- Contractual parties are released from their contractual obligations form he point that the frustrating event occurred
- Parties are nevertheless bound by any contractual obligations that arose before the frustrating event occurred
- A party that made payments prior to the frustrating event could recover these payments only if there is a total failure of consideration - Fibrosa case
When will a ‘breach’ occur of a contract?
A breach will occur where, without a lawful excuse, a party fails/refuses to perform a contractual obligation imposed by the terms of the contract or performance is defective
What happens if you terminate a contract when not entitled to?
Then you’re in breach of contract yourself, the other party can terminate and claim remedies from you
