Frustration

Question 1

What is Frustration?

Answer 1

• An event that occurs outside of the party’s controls that renders the contract as invalid

Question 2

How are each of the parties affected with frustration?

Answer 2

• If contract remains on foot –> Party unable to perform will be liable for damages
• If contract is set aside –> Party who will no longer receive the promised performance or who has incurred costs may be disadvantaged

Question 3

Case for Frustration Test?

Answer 3

Cutter v Powell
Nemeth v Bayswater

Question 4

What is the Frustration Test?

Answer 4

• WITHOUT default –> either party CANNOT perform obligation of contract since the conditions are ‘radically different’

Question 5

Frustration allows the contract to be …

Answer 5

• Discharged
• Requires no more performance required

Question 6

What are some common events for Frustration?

Answer 6

• Illegality
• Disappearance on basis of contract –> new context has caused contract to be useless
• Delay –> ‘frustrated delay’ for it to be sufficient
• Destruction of Subject Matter / Death of a person
• Disappearance of State of Affairs essential to performance

Question 7

What are limitations to Frustrating a contract?

Answer 7

• Event was forseeable
• RIsk of an event was ALLOCATED on the contract (implied or express)
• Event was caused by FAULT of party seeking to rely on frustration