Termination

Question 1

What is the general rule if obligations are not performend completely under a contract?

Answer 1

Complete performance of obligations are required to avoid breach of contract

Question 2

What is a defence to failure to fufil obligations under contract?

Answer 2

Frustration

Question 3

What conditions must be satisfied for frustration to apply?

Answer 3

A supervening event:
1. occurs after contract formed
2. makes performance impossible or radically different
3. unforseen
4. beyond the parties’ control

Question 4

Examples of circumstances which render performance of contract radically different

Answer 4

1. Gov intervention
2. Unavailability of a SPECIFIC person CRUCIAL to contract
3. Illegality
4. Destruction of subject matter
5. Non-occurrence of a fundamental event

Question 5

What are the consequences of frustration?

Answer 5

1. Contract terminated by operation of law
2. Refund of past payments + future payments do not have to be paid
3. May be able to recover expenses (at discretion of court) totalling no more than sums already fallen due
4. May be able to charge for any benefit the other party received before frustration (if benefit is destroyed, cannot charge for benefit)

Question 6

What factors determine whether unavailability of a person will lead to frustration

Answer 6

1. length of contract
2. length of period of absence
3. whether contract specifies particular individual must do work or if a substitute could do the work

Question 7

What factors determine whether non-occurence of a fundamental event constitute frustration?

Answer 7

Frustrated if: event was sole purpose (room hire during day to view procession)
Not frustrated if: event was one of multiple purposes and other purposes unaffected (day cruise and naval fleet)

Question 8

Does delay constitute frustration?

Answer 8

No

Question 9

Is an event causing delay (e.g. route diversion) frustrating?

Answer 9

GR: No
EXCEPTIONS:
1. route specified;
2. delivery date agreed; or
3. value of goods impacted by longer route

Question 10

Do labour shortages constitute frustration?

Answer 10

No

Question 11

When may illegality frustrate a contract?

Answer 11

1. Change of law after contract entered into
2. Outbreak of war if other part is in enemy occupied territory

Question 12

When will an event not frustrate a contract on the basis it was forseen?

Answer 12

Express clause in contract covering frustrating event (force majeure clause)

Question 13

What is the impact of a force majeure clause?

Answer 13

Party in breach may still have a defence for breach (failing to fulfil obligations) provided clause covers event and is reasonable (UCTA)

Question 14

Examples where frustration was not a defence because the event was regarded as self-induced

Answer 14

1. C has licences but chooses not to use them on hired trawler
2. C elects to use subject matter to fulfil another contract