Frustration

Question 1

Frustration plan

Answer 1

Doctrine of frustration - where a contract can be discharged when an unforeseen event makes performance impossible, illegal or radically different from what was agreed

Certain limitations imposed where may be unfair to void the contract:
- one party induces the frustrating event (would lead to breach)
- event is expressly provided for in contract (frustration doesn’t apply)
- actual event was/should’ve been foreseen

Ways of frustration:
1) Impossibility
- 4 ways:
1. subject matter is destroyed - Taylor v Caldwell
2. subject matter is unavailable - Morgan v Manser
3. one of the parties dies
4. risk of contract unable to be performed completely

2) Illegality
- both parties willing to perform, change in law prevents this - Denny, Mott & Dickinson v James B. Fraser & Co

3) Radically different
- central purpose of contract destroyed by frustrating event - original contract no longer ha a point - Krell v Henry
- whether or not the contract can be continued is a question of fact
- may just be a subsidiary element - no frustration of the common venture (commercial purpose of contract) - Herne Bay Steamboat Company v Hutton

Prima facie - consider the frustrating event (eg a storm)

The Law Reform (Frustrated Contracts) Act 1943:
- Created to address some unfairness of common law doctrine
- s1(2) - damages are recoverable for any paid/payable expenses incurred prior to frustrating event
- s1(3) - gives the court discretion to award injured party with a ‘just sum’ to compensate expenses incurred during preparation for contract

Question 2

Taylor v Caldwell

Answer 2

Impossibility - destroyed

Performance became impossible as subject matter (building) was destroyed in a fire

Question 3

Krell v Henry

Answer 3

Radically different/common venture

Contract was tailored to a specific event, so the cancellation was frustration as foundation/central purpose could no longer be performed

Question 4

Herne Bay Steamboat Company v Hutton

Answer 4

Central purpose (a trip around Solant) remained, so no frustration

Question 5

Denny, Mott & Dickinson v James B. Fraser & Co

Answer 5

Illegality

Contract for sale of timber was frustrated by the Control of Timber (No 4) Order 1939

Question 6

Morgan v Manser

Answer 6

Impossibility - unavailable

A music hall artist’s contract was frustrated as he was called up for military service