Contract Law - Week 18b Lectures The Doctrine of Frustration Issues . Nature of the doctrine - origins and rationale · What can 'frustrate' a contract? · Limitations on the doctrine · Effects under common law . The Law Reform (Frustrated Contracts) Act 1943 Nature of the doctrine · What happens if an unforeseen event seriously affects a contract, after it has been made but before it has been performed? - what are the rights and liabilities of the parties? . Similarities with common mistake - analogy emphasised by The Great Peace . But deals with events occurring subsequent to the contract coming in to existence Origins/rationale • Paradine v Jane (1647) - freedom of contract o Too harsh? • Taylor v Caldwell (1863) - implied term o Logically problematic? . Davis Contractors Ltd v Fareham UDC (1956) - theory of construction · 'frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstance in which performance is called for would render it a thing radically different from that which was undertaken by the contract' o Lord Radcliffe . National Carriers Ltd v Panalpina (Northern) Ltd (1981)- endorsed by the H of L . The question then is what situations will render performance 'radically different' and therefore frustrate a contract? . The question is a matter of interpretation Scope of Frustration · Performance becoming difficult/delay/interruptionft Tsakiroglou & Co v Noble Thorl GmbH . Allocation of Risk and Force majeureft The Super Servant Two; Metropolitan Water Board v Dick Kerr and Co; Amalgamated Investment & property v John Walker & sons What can frustrate a contract? 1. Destruction of subjectftmatter/Impossibility . Taylor v Caldwell (1863); · Asfar v Blundell (1896); . Jackson v Union Marine Insurance Co Ltd; . Section 7 Sale of Goods Act 1979 1. Illness/Death/Incapacity . Notcutt v Universal Equipment Co Ltd [1986]
1. Nonftoccurrence of event/frustration of purpose · Krell v Henry (1903); . Herne Bay Steamboat Co v Hutton (1903) 1. Illegality . Metropolitan Water Board v Dick Kerr (1918) Frustration of Leases • National Carriers Ltd v Panalpina Limits: SelfftInduced Frustration . Maritime National Fish v Ocean Trawlers (1935) . The Super Servant Two (1990) Effects of Frustration · Common Law - Contract is automatically brought to an end - Future obligations are removedft Krell v Henry – Past obligations remain - Chandler v Webster (1904) – Note effect of 'total failure of consideration' - Fibrosa Spolka Ackyjna v Fairbairn Lawson Combe Barbour Ltd (1942) – note Appleby v Myers [1867] Law Reform (Frustrated Contracts) Act 1943 · Section 1(2) - - Money paid or payable is recoverable - Expenses may be retained - at the discretion of the court - where it is 'just' to do so – Gamerco v ICM (1995) Operation of s1(2) · A contracts with B to paint A's house for £3,000 · A pays £500 as deposit, the rest payable on completion · B buys paint