Frustration

Question 1

What is frustration in contract law?

Answer 1

Frustration is where the contract becomes impossible to perform due to a frustrating event that was outside the parties’ control or contemplation.

Question 2

What is the strict rule regarding contract performance?

Answer 2

You must perform regardless of what happens.

Paradine v Jane

Question 3

What are the possible grounds for frustration?

Answer 3

1) Impossibility of Performance
2) Illegality
3) Radical Change in Circumstances

Question 4

What constitutes impossibility of performance?

Answer 4

A contract is frustrated if performance becomes impossible, such as when a specific item is destroyed.

Taylor v Caldwell

Question 5

What is the side rule regarding services in frustration?

Answer 5

In a contract for services, the frustrating event may be the unavailability of the party who is to perform.

Question 6

What is subsequent illegality in frustration?

Answer 6

A contract is frustrated if a change in the law makes it illegal to perform.

Denny, Mott & Dickson Ltd

Question 7

What is a radical change in circumstances?

Answer 7

The contract is frustrated if its essential commercial purpose cannot be achieved, such as when an event doesn’t happen.

Krell v Henry

Question 8

What are the possible counter-arguments for frustration?

Answer 8

1) Self-Induced Frustration
2) Contract Becomes Less Profitable
3) Foreseeable Risk

Question 9

What is self-induced frustration?

Answer 9

If the event was within the control of one party, frustration will not apply.

Maritime National Fish Ltd v Ocean Trawlers Ltd

Question 10

Does a contract being less profitable constitute frustration?

Answer 10

A contract being less profitable or more difficult is not grounds for frustration.

Davis Contractors Ltd

Question 11

What is the impact of foreseeable risk on frustration?

Answer 11

If the event was foreseeable or included in the contract, frustration will not apply.

Amalgamated Investment v Walker & Sons

Question 12

What remedies are available for frustration under common law?

Answer 12

Frustration automatically terminates the contract; existing obligations must be completed, and future ones are ended.

Question 13

What does the Law Reform (Frustrated Contracts) Act 1943 state about money paid?

Answer 13

Money already paid is recoverable.

S.1(2)

Question 14

What does the Law Reform (Frustrated Contracts) Act 1943 state about money outstanding?

Answer 14

Money outstanding is not payable.

S.1(2)

Question 15

What compensation may the court order under the Law Reform (Frustrated Contracts) Act 1943?

Answer 15

The court may order compensation for work done/expenses incurred and for any valuable benefit received, to a just amount.

S.1(2) and S.1(3)

Question 16

What should be considered if the contract has not been frustrated?

Answer 16

Consider whether the contract has been breached.