Discharge of Contract - Frustration and Breach

Question 1

What is frustration defined as?

Answer 1

Frustration is where a party is prevented from keeping a promise due to an unforeseeable, intervening event.

Here, there can be no liability for breach of contract.

Question 2

Describe 1) How can contracts be F?

Answer 2

Contracts can be F by:
- Impossibility (Jackson v UMI),
- The contract becoming illegal (DMD v JF), or,
- If the contract is based on an event and the event cannot take place (Krell v Henry).

APPLY

Question 3

Describe 2) Where F cannot occur:

Answer 3

However, F cannot apply where:
- The F event is self-induced (MNF v OT),
- The contract has become less profitable or more difficult to complete (DC v FUDC),
- The event is a foreseeable risk, or the event was mentioned in the contract (AIP v John Walker).

APPLY

Question 4

Describe 3) If a contract is F then…

Answer 4

If the contract is F, then —would be released from performing their obligations under s1 (1) of the F Contracts Act 1943.
- Under s1 (2), money already paid under the contract is recoverable, but money due is not payable. Compensation can be paid for work done, expenses incurred before the event occurred, but it is at the discretion of the court.
- Under s1 (3), the court can order compensation where a valuable benefit has been conferred.

Question 5

Where does breach occur and where should it be included in an answer?

Answer 5

If a contract is not discharged by frustration, there can be breach of contract (meaning to fail to preform an obligation under a contract).

It should always be included in a question about frustration.

There are two types:
- Actual
- Anticipatory

Question 6

Describe actual breach:

Answer 6

Actual breach is total failure to perform the terms of the contract.

Question 7

Describe anticipatory breach:

Answer 7

When a party to a contract gives notice in advance to the other party that they will not be performing or completing terms of the contract (Hochster).