Frustration

Question 1

Introduction: Paradine v Jane

Answer 1

• Established the principle of absolute liability for contractual obligations, meaning parties are generally bound to perform their contractual duties
• Even if unforeseen events make performance difficult or impossible

Question 2

Introduction: Taylor v Caldwell

Answer 2

• Music hall didn’t get fire under control, whole place burnt down
• Court held that Caldwell did not breach as performance was made impossible
• Term is implied into contract that where contract rests on the continued existence of a thing, performance becomes impossible

Question 3

The doctrine of frustration: Davis contractors

Answer 3

• An abandonment of the approach that frustration depends upon an implied term
• Frustration requires an unforeseen “radical change” in the nature of the contract, not merely increased difficulty or expense

Question 4

Doctrine (The key test): National carriers

Answer 4

• Where there supervenes an event
• Which so significantly changes the nature of the contractual rights/obligations
• That it would be unjust to hold them to it.
• Thus, the contract is discharged

Question 5

Doctrine: Edwinton Commercial Corp [the multifactoral approach]

Answer 5

• In considering whether a contract is frustrated, consider the parties’ knowledge, expectations, contemplations (particularly with regard to risk)
• Also establishes that frustration is a high bar and courts are reluctant to discharge

Question 6

Instances of frustration: Destruction of subject matter: Taylor v Caldwell

Answer 6

• Music hall burned down
• Continued existence of the thing, not satisfied
  = Discharged

Question 7

Instances of frustration: Personal Service contracts: Cutter v Powell

Answer 7

• Sailor dies en-route, cannot perform the services, it is frustrated

Question 8

Instances of frustration: Personal Service contracts: Condor v Barron Knights

Answer 8

• Nervous breakdown stops him from performing as much
• Court rules he cannot perform sufficiently his duties
• Frustrated

Question 9

Instances of frustration: Unavailability and interruption: Acetylene Co of GB

Answer 9

• A considerable amount of time without being able to carry out obligations can frustrate a contract

Question 10

Instances of frustration: Failure of Source: Howell v Copeland

Answer 10

• Contract stipulates potatoes must come from specific farm
• No longer becomes possible to grow there
• Contract is frustrated

Question 11

Instances of frustration: Failure of Source: Blackburn Bobbin Co [1918]

Answer 11

• 1st World War case
• One party sold, one bought timber
• Couldn’t ship timber from Finland as the boats were needed for war effort
• Courts said timber didn’t need to be from Finland (no source stipulated) and they had to find the timber elsewhere
  = no complete failure of source

Question 12

Instances of frustration: Method of Performance: Tsakiroglou & Co

Answer 12

• If contract can be performed another way (through Suez Canal here), and specific method is not stipulated, no frustration

Question 13

Instances of frustration: Supervening Illegality: Fibrosa Spolka

Answer 13

• Where a contract becomes illegal to perform due to an unforeseen event (like trading with the enemy in war), it is frustrated

Question 14

Limits to frustration: Assuming the risk: CTI Group

Answer 14

• If one of the parties assumes the risk that frustration may occur

Question 15

Limits to frustration: Impracticality is not sufficient: Krell v Henry

Answer 15

• There is no remaining purpose - the “room with a view” of the coronation is fundamental base of the contract

Question 16

Limits to frustration: Imprudent bargains: The Nema

Answer 16

• Court will not discharge a contract frustrated by entering into an imprudent bargain

Question 17

Limits to frustration: Foreseeability: Both cases?

Answer 17

• If the contract doesn’t make sufficient provision for it, then it is frustrated

Question 18

Limits to frustration: Frustration must not be self-induced: Maritime National Fish

Answer 18

• Fishing company said the contract for hire is frustrated as it required a license to operate
• Company applied for too few licenses
• Does not frustrate, could have used a license from another non-hired boat

Question 19

Limits to frustration: Frustration must not be self-induced: Super Servent Two

Answer 19

• Fishing company used both ships at once for different contracts, court held that when SS1 sunk it was the company’s choice not to send SS2 - so contract frustrated

Question 20

Effects of frustration: Severability

Answer 20

• If the section of the contract which is frustrated can be severed - the court allows that

Question 21

Effects: What if the contract doesn’t fit within s2(5) (this act does not apply…)

Answer 21

Determined by the common law.
Most are determined by the act though

Question 22

Effects: At common law: Chandler v Webster

Answer 22

Money payable cannot be recovered back unless the failure of consideration is total

Question 23

Effects: At common law: Appleby v Myers

Answer 23

When a party enters an entire contract and performs in part but fails to complete (other than result of other party’s breach) - he can recover nothing