contract law frustration essay

• High School
• You don't have any recent items yet.
• You don't have any modules yet.
• You don't have any books yet.
• You don't have any Studylists yet.
• Information

Contract LAW ( Frustration Essays) EXAM

Contract law, university of london.

Recommended for you

Students also viewed.

• Contract Law
• Misrepresentation
• Misrepresentation Answer for contract law
• Contract LAW ( Restrain OF Trade Essay)
• Offer and Acceptance
• Contract law past papers

Related documents

• Intention to Create Legal Relations Essay
• Formative assessment contract law - offer & acceptance
• Contract Mock Exam - it will help in assessing the exams and for school work. it has papers solved
• Teaching notes week 9 Telford Homes
• misrepresentation
• Contract law - sample essay

Related Studylists

Preview text, contract law, frustration, essay answer angel.

Q/ Discuss this definition of frustration in the context of the narrow application of the doctrine and the limited recovery of losses incurred in the performance of a contract which is later frustrated.

Ans: The effects of the absolute contracts rule as in Paradine v Jane (1647) have been mitigated to a large extent by the development of the doctrine of frustration, which allows a change of circumstance to discharge the contractual obligations from the date of the frustrating event (Taylor v Caldwell (1863) . Davis Contractors Ltd v Fareham UDC [1956] reflects this decision and articulates the modern test for frustration as being an event which has made the contract impossible to perform, illegal or radically different from that originally agreed to. Lord Griffiths’s definition articulates the doctrine’s further limitations: there must be a supervening event which is unforeseen and beyond the control of either party.

The categories of frustration are not closed. Of importance is the effect the ‘supervening event’ has on the contract rather than the nature of the event itself. The 1903 Coronation cases illustrate how the same supervening event may be frustrating in one set of circumstances but not in another. In Krell v Henry [1903] the cancellation of the Coronation operated as a frustrating event in relation to a contract for the hire of a flat on Pall Mall on the dates of the Coronation procession. There was no mention of the purpose of the rental in the contract. It was found that the fundamental purpose at the root of the contract was to view the procession and that the King’s illness defeated this purpose. By contrast, in Herne Bay Steam Boat Co. v Hutton [1903] the contract did mention the Royal Navy review of the ships, which again was cancelled owing to the King’s illness. The contract was not frustrated. There was still some purpose to the contract, the fleet could still be viewed and tours made around the bay. Therefore even if a supervening event is unforeseen, and beyond the control or even contemplation of the parties, it will not amount to frustration unless it has the effect of rendering a contract radically different from that which was originally agreed to. The doctrine of frustration therefore has an even narrower application than suggested in the quotation. Furthermore, it does not allow parties to escape from what has become a less lucrative or profitable deal (Davis Contractors Ltd v Fareham UDC . Contracts will only be discharged in the most exceptional circumstances.

Lord Griffiths recognises that in order for the doctrine of frustration to operate the supervening event must be unforeseen. If the parties have made express provision for the event which it is alleged frustrated the contract, the doctrine will not apply as the parties have allocated the risk between themselves. This is frequently done through the use of hardship or force majeure clauses. Risk can also be implied to lie with one party rather than the other. In Amalgamated Investment and Property Co. Ltd v John Walker & Sons Ltd [1977] the risk of an older building being listed would be with the buyer.

Lord Griffiths’s definition requires that the parties have no control over the supervening event. This goes beyond a blatantly culpable or negligent act to a situation where a party having any control or choice will be prevented from relying on the doctrine as the frustration will be deemed to be self-induced. In Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] the choice of which boats to allocate a finite number of licences meant that the remaining boats could not be hired to fish lawfully. This decision sits comfortably with Lord Griffiths’s assertions as to control. In the case of the Super Servant Two [1990] the sinking of one of two vessels capable of carrying drill rigs amounted to self-induced frustration as there was a choice as to which vessel could have carried the rig, even though in reality the only control or choice open was which contract to break. To avoid a finding of self-induced frustration in this case, the contract must have specifically allocated the services of the Super Servant Two or both ships must have been destroyed. The decision can appear harsh: however, it does encourage the parties to allocate risk between them and prevents preferences. Perhaps it is worth noting that the Super Servant Two was allocated to the claimants, demonstrating a preference by the defendants towards honouring contractual obligations to hirers with whom a contract was formed at a later date but at a higher price.

The Law Reform (Frustrated Contracts) Act 1943 allows for limited recovery of monies paid, expenses incurred, or valuable benefit gained; it does not apportion losses. Prior to the Act, losses fell where they lay at the date of the frustrating event, discharging all contractual obligations at that date. As such, any deposit paid or money due before the date of frustration remained due or could not be recovered, whereas money payable after the supervening event ceased to be payable. Following the decision in Fibrosa Spolka Akcyina v Fairburn Lawson Combe Barbour Ltd [1943] money paid could be recovered if there was a total failure of consideration. The 1943 Act also discharges all obligations on the date of the frustrating event. However, the Act also provides that monies paid prior to the frustrating event are recoverable without the requirement of a total failure of consideration, but subject to the retention of monies by the other party who has incurred expenses in the performance of the contract section 1(2).13 Just expenses cannot exceed amounts paid or due before the date of the frustrating event.

The court will never allow bad bargain to take advantage of frustration neither allow to use frustration as an escaped route (Paradine v James)

The situations when frustration is to occur are first of all impossibility in (Taylor v Caldwell) the court held that the contract will be frustrated if the subject matter of the contract has been destroyed. The contract will be frustrated if the subject matter is unavailable (Backline v Arthur). The unavailability could be temporary (Jackson v Union Minister). A strike could be sufficient for frustration (The Nema).

A contract will not be frustrated if there is a foreseeable event (Walton v Walker).An event is foreseeable if any reasonable person would regard as likely to occur (Treitel).

Personal incapability could also frustrated a contract personal incapability occurs when the person doing the contract dies or have any personal incapability to perform a contract.(Condor v Baron Knights).The mere fact that the contract has become expensive then the contract would not be frustrated (Tsakiroglou v Nobble Thorl) and (Davis Contractors v Fareham UDC). Moreover contract can be frustrated due to the Non- occurrence of an event, In (Krell v Henry) the court held that the contract will be frustrated if the main purpose of the contract is destroyed.

In (Herne Bay v Hutton) the court held that the contract will be not frustrated if there are multipurpose of a contract and only purpose is destroyed.

In (Krell) the contract was frustrated because the common foundation of the contract was destroyed and the court needs to find what the common purpose of the contract is?. However in recent times (Krell) becomes a very narrow decision and has been distinguished in modern case such as (Amalgated v John Walker).

If the party entered into a contract with another party for any illegal purpose or any government decisions makes the contract illegal to perform then the contract will be frustrated (Fibrosa v Fairbairn).It is possible for the parties at time of doing contract , they can rely on force majeure clauses or Hardship clauses to limit the scope of frustration but it is not possible to exclude the operation of the doctrine of frustration by any express provision.(Metropolitan Water Board v Dickkerr).

A contract will not be frustrated if it has occurred due to the fault of either of the parties (Maritime National Fish v Ocean Trawlers).

Now comes the s of frustration on the contract as we know if the contract is frustrated it becomes void but there some affects which are under common law and Statue. First of all under common law where the contract is frustrated the parties are discharged from their obligations (Fibrosa v Fairbairn).In (Fibrosa) The House of Lord reduced the harshness of common law by ruling that a total failure of consideration in terms of non-

performance of would allow the parties to discharge the obligation or recover the payment.

On the other under the statue the allocation of loss is decided by The Law Reform (Frustrated Contracts) Act 1943. This provides

s (2) All money payable under the contract ceases to be payable and any money paid may be recovered. Where expenses have been incurred this may be deducted from the amounts payable or paid. This is at the discretion of the court and is subject to what is just and equitable in the circumstances of the case. There is no provision allowing expenses to be recovered which exceeds the amounts paid or payable.

s (3)-Where a valuable benefit has been conferred this must be paid for. The courts will consider all the circumstances of the case (BP Exploration (Libya)). Lord Goff stated that the benefit must have incurred after the frustrating events.

• Multiple Choice

Module : Contract law

University : university of london, this is a preview.

Access to all documents

Get Unlimited Downloads

Improve your grades

Get 30 days of free Premium

Share your documents to unlock

Why is this page out of focus?

The Law on Frustration of Contract Essay

For decades, the legal issue of compliance with contracts has been a subject of discussion in courts. The primary challenge of executing a contract agreement is ensuring that the agreement between the signing parties would take into account the possible external implications and attributes. Breaching the contract due to unforeseen events is generally known as contract frustration. Since the ratification of the law reform on handling frustrated contracts, the process of negotiating damages has changed dramatically. However, while both contract parties can now reach a settlement, the legal system does not provide detailed insights into the characteristics of a frustrated contract.

The history of frustrated contracts received the most attention during the cases related to the 1902 coronation of King Edward VII and Queen Alexandra. Thus, for example, in Krell v Henry, the legal precedent addressed the defendant’s inquiry for rent reimbursement. Initially renting an apartment to witness the coronation, the defendant was unwilling to pay the total price to the tenant after the event was cancelled. However, the judges ruled that without an explicit contract breach on the plaintiff’s side, the latter was eligible to receive the rental price discussed in the agreement.

A similar ruling was issued in Herne Bay Steamboat Co v Hutton, as the judges found no contract frustration and ruled a full financial reimbursement for the plaintiff. Before the coronation incident, another claim was rejected in the case of Taylor v Caldwell, where the defendant was not financially reimbursed after the rented concert hall burned to the ground. Since then, the Law Revision Committee decided to reconsider the existing legislation and provide parties with partial or full reimbursement in case of unforeseen events.

In 1943, the Law Reform on Frustrated Contracts came into effect, clarifying the sides’ rights in the event of frustration. According to the Act, the court has the prerogative to modify the initial terms of the agreement once frustration is identified. However, if the performance of the contract fails due to other events, frustration laws are inapplicable. For example, in Davis Contractors Ltd v Fareham Urban District Council, Davis Contractors filed for frustration in order for the plaintiff to pay the cost difference for the services provided. The motion was denied because increased complexity does not comply with an unforeseen event.

The same rule applies to the wording of the contract in question. For example, in Arnold v Britton, the defendant addressed that the lease signed more than two decades ago had then resulted in unprecedently high service charges and could not be viewed as a reliable contract. The judges ruled that the disturbing and unbeneficial implications of a contract do not qualify for its frustration. Hence, it can be concluded that currently, the law on the frustration of contract implies immediate contract termination and bilateral reimbursement agreements only if the event of frustration has not been caused by any of the parties and has been justified as such by the court.

To conclude, the notion of contract frustration remains relevant given the context of the COVID-19 pandemic and complex legal relationships between the stakeholders. Considering that even the existing issue of impossibility to fulfil the contractual agreements serves no ground for frustration and termination on mutual terms, more legal advice is needed in the future. The ratification of the Law Reform Act does not provide sufficient insights into the potential implications of frustrating events because the law does not encompass the complexity of modern contractual agreements.

Law Reform (Frustrated Contracts) Act 1943

Krell v Henry [1903] 2 KB 740

Herne Bay Steamboat Co v Hutton [1903] 2 KB 683

Taylor v Caldwell [1863] EWHC QB J1

Davis Contractors Ltd v Fareham Urban District Council [1956] UKHL 3

Arnold v Brittan [2015] UKSC 36

• United Kingdom Tort Law: Negligence, Strict and Specific Torts
• Fiduciary Duty of Care and Responsibility of Loyalty
• Westminster Abbey or the Collegiate Church of Saint Peter at Westminster, London
• The Musical Instrument Selection in the Baroque Period
• Ratification Process of the Constitution of 1787
• Land Possession Law in the UK
• Perjury: Two Types With Different Aspects
• Informed Consent and Its Importance
• Are UK and US Laws Similar or Different?
• Impact of Corporate Manslaughter and Corporate Homicide Act 2007
• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2024, March 12). The Law on Frustration of Contract. https://ivypanda.com/essays/the-law-on-frustration-of-contract/

"The Law on Frustration of Contract." IvyPanda , 12 Mar. 2024, ivypanda.com/essays/the-law-on-frustration-of-contract/.

IvyPanda . (2024) 'The Law on Frustration of Contract'. 12 March.

IvyPanda . 2024. "The Law on Frustration of Contract." March 12, 2024. https://ivypanda.com/essays/the-law-on-frustration-of-contract/.

1. IvyPanda . "The Law on Frustration of Contract." March 12, 2024. https://ivypanda.com/essays/the-law-on-frustration-of-contract/.

Bibliography

IvyPanda . "The Law on Frustration of Contract." March 12, 2024. https://ivypanda.com/essays/the-law-on-frustration-of-contract/.

• To find inspiration for your paper and overcome writer’s block
• As a source of information (ensure proper referencing)
• As a template for you assignment