Frustration

Question 1

1. Def

Answer 1

Frustration is when an unforeseeable, unpredictable event which is no parties fault leads to a breach
of contract

Question 2

2. Impossibility, illegality, change in circumstance

Answer 2

There can be several grounds for claiming frustration (discuss the relevant grounds):

a. Impossibility where the contract becomes impossible to perform which could be due to the
subject matter being destroyed (Taylor v Caldwell) or becoming unavaliable (Jackson)

b. A contract may also be frustrated due to illegality which is a result of a change in the law
making the performance of the contract illegal (Denny Mott & Dickson)

c. A contract may also be frustrated due to a radical change of circumstances which means the
commercial purpose (main purpose) of the contract cannot be achieved any longer. For
example, in Krell v Henry the postponment of the King’s coronation made the contract to hire
a hotel room to watch the coronation commercially sterile. Whereas, in Hutton the commercial
purpose was not destroyed as C could still see the fleet of ships assembled

Question 3

3. Lease con

Answer 3

With lease contracts, if the lease is only temporarily interupted then it will not be found to be frustrated
(National Carriers). In Canary Wharf, the court decided that Brexit will not frustrate the EMA’s lease
of premises of London as the premises could still be used to sub-let

Question 4

4. Illness

Answer 4

4. In a contract for services (employment contract), the frustrating event may be the unavaliability of the
   party due to illness (Robinson)

Question 5

5. Limit events

Answer 5

There are also events which can limit frustration (discuss the relevant grounds):

a. A contract is less profitable to perform. If the contract can be performed but this would be more
difficult or less profitable for the defendant, they will be expected to perform the contract and
cannot claim the contract was frustrated if they do not

b. The frustrating event is foreseeable. If the parties foresee the frustrating event taking place
they will be able to take precautions to prevent this happening so will be unable to claim the
contract was frustrated

c. The frustration is self-induced

Question 6

6. Remedies

Answer 6

The Law Reform (Frustrated Contracts) Act 1943 provides four remedies available if there is a
successful frustration case:

a. Money already paid in advanced must be returned and any money due does not have to be
paid
b. Courts have discretion to order compensation for work done and expenses incurred
c. Amount due is based on a quantum meruit basis - “as much as he has deserved”
d. Appropriate and fair compensation for any benefit one party may receive under
a frustrated contract