Doctrine of Frustration So far looked at issues that happen during the negotiation of the contract (Mistake and Misrepresentation)- later find out that something has gone wrong during negs, law steps in and says that the consent of one of the parties is vitiated- contract wont be upheld. Frustration: An Overview Similarly, to misrep. and mistake, we sstart with what looks like a binding contract, the doctrine of frustrations (differently) looks at subsequent events after the formation of the contract. - What should happen when an uncontemplated/ unforeseeable event makes performance of the original contract impossible? DoF deals with this. - Works alongside risk allocation (how the parties have prepared for things which 'might' happen after the signing of the contract) - Purpose: Doctrine concerns effect of events which occur after the contract has been concluded - A response to the absolute (very harsh) approach in Paradine v Jane (1647) Aleyn 26, King's Bench In this case, the law refused to allow parties to escape their contractual obligations even though something happened which made performance very difficult/ impossible; - Reason: Law said a contract is a voluntarily assumed obligation, you entered the contract freely, you could have made provision within the contract to deal with subsequent events- you chose not to- it is not for the law to provide an escape for a bad bargain. ** A narrow approach in English law **- the courts/ the DoF do NOT make it easy to escape from a contract- aware of the potential invoking of frustration to get out of a bad bargain (an uneconomic/ expensive contract to perform) - The idea is that contracts are made to be performed. DoF acts automatically as a matter of law, the parties do not get involved in the operation of the doctrine, it happens automatically. - Why is this interesting? There are methods in which parties can make provisions for subsequent events within contracts i.e. they can choose when negotiating a contract to insert clauses to make provisions for potentially detrimental events (events which we cannot say with certainty what they are/ how they might affect the contract but we see the risk that something might happen, which may affect the performance) - Ex ante methods of allocating risk within the contract: force majeure (this is a clause specifying a list of events e.g. Strikes, pandemics, acts of god- and it will specify what should happen if one of these events takes place) and hardship clauses (requires parties to renegotiate if one becomes subject to financial difficulty and cant uphold their original terms).
These are e.g.s of pre contractual actions that parties can take to overcome the risks that something might happen subsequently- so this (sort of) gets around the issue of the DoF being quite narrow. Leaves us in a strange position- tension between a narrow doctrine of frustration but on the other hand, there is no incentive for the courts or Parliament to do anything about it- typically we see (commercial) parties