Cycle 6 February 2021 Law of Contract Frustration I. How do contracts end - An Introduction A. Performance · Everything could go to plan. No need for lawyers to get involved B. Variation . It could be varied. · New consideration needed · Folkson v Beer C. Breach . One party could fail to perform their obligations · Other party entitled to remedy, like damages to compensate losses D. Frustration · A contract will be frustrated when 1. An event takes place that the contract does not provide for; and 2. Neither party is at fault; and 3. Performance of the contract becomes radically different as a result o Taylor v Caldwell [1863] 3B&S 826 FACTS " Claimant hired out a music hall in Surrey for the purpose of holding four grand concerts " The claimant went to great expense and effort in organising the concerts " However, a week before the first concert was due to take place the music hall was destroyed by an accidental fire " The claimant sought to bring an action for breach of contract for failing to provide the hall and claiming damages for the expenses incurred HELD " Mr Justice Blackburn said that Caldwell did not breach the contract and therefore didn't have to compensate Taylor " The contract had been frustrated " Blackburn J: 'The parties shall be excused in case, before breach, performance becomes impossible from perishing of the thing without default of the contractor' II. When does frustration occur? A. The event is not provided for · Rare in practice
February 2021 Law of Contract Cycle 6 . Most contracts have a "force majeure" close which sets out what would happen if an unforeseen end interferes with the performance of the contract Example: 'The seller is not responsible for any failure to perform its obligations under this contract, if it is prevented or delayed in performing those obligations by an event or force majeure, including but not limited to war, terrorism, radiation, earthquake, flood or fire' -> frustration will not take form o Canary Wharf v European Medicines Agency [2019] EWHC 335 . FACTS EMA had leased a building in Canary Wharf After Brexit had to relocate to Amsterdam EMA argued that Brexit had frustrated their lease · ISSUE " What would happen to their lease in London · JUDftEMENT Marcus Smith J argued that 'the supervening event is the EMA's involuntary departure from the premises ... I find that his involuntary departure was, in fact, not merely envisaged but expressly provided for in the lease.' " Contract didn't provide for the possibility of Brexit but did provide for circumstances in which the EMA would have to involuntarily leave its office Marcus Smith stated that the contract should have included in the Regulation provisions dealing with the EMA's departure from London " Terms acted as a force majeure close " Frustration could not operate o Bunge v ffiyla Shipping [2012] " FACTS " ffiyla Shipping Co Ltd left their vessel