Discharge By Frustation

Question 1

Introduction

Answer 1

Old rule : party bound to perform contract even if impossible
(Paradine v Jane) : D forced to pay rent even though they couldn’t live in property as army made them leave

Current law : less harsh, if there is an unforeseeable act intervening so contract cannot be performed
- If frustrated neither party will have to fulfill contract
- No remedy available for ‘force majeure clause’

Question 2

When does frustration not apply?

Answer 2

1. Self induced
   - If event is within the control of party (Maritime National Fish v Ocean Trawlers)
2. Less profitable
   - Less profitable/more difficult (Davis contractors v Fareham)
   - may result in breach
3. Foreseeable risk/mentioned in contract
   - If risk foreseeable contract will not be frustrated
   - Relucant to use and often not work
   (Amalgamated Investment and Property v John Walker)

Question 3

Remedies

Answer 3

Law Reform (Frustrated Contracts) Act 1943
S.1(2) : Money already paid is recoverable, any money that should be paid doesn’t have to be, discretion may be used to order compensation

S.1(3) : can be ordered for any valuable benefit

Question 4

When does frustration apply?

Answer 4

1. Impossible to complete
   - Subject matter destroyed (Taylor v Caldwell)
   - Subject matter unavailable (Jackson v Union Marine Insurance)
   - Person unavailable (Condor v The Baron Knights)
2. Illegal to perform
   - Changes in law (Denny Mott and Dickinson v James B Fraser)
3. Radical change in circumstance
   - Main purpose cannot occur (Krell v Henry)

Question 5

When does frustration apply?

Answer 5

1. Impossible to complete
   - Subject matter destroyed (Taylor v Caldwell)
   - Subject matter unavailable (Jackson v Union Marine Insurance)
   - Person unavailable (Condor v The Baron Knights)
2. Illegal to perform
   - Changes in law (Denny Mott and Dickinson v James B Fraser)
3. Radical change in circumstance
   - Main purpose cannot occur (Krell v Henry)