Friday, June 17, 2016

Contract Law - Frustration

PrincipleCase Name / Definition
Definition of frustrationFrustration occurs when, without fault of either party, a contratual obligation has become either impossible, illegal or radically different from that which was undertaken by the contract

Lord Radcliffe in Davis v Fareham UDC HL [1956]
Original position - contract is absolute and couldn't be avoided for any reasonParadine v Jane [1647]
Introduced the concept of frustration by using Implied terms

- to excuse the parties if performance becomes impossible because of the destruction of the subject matter - a concert hall
Taylor v Caldwell [1863]
Modern view of frustration - depends on the construction of the contractDavis v Fareham UDC [1956]
The doctrine is not to be lightly invoked (3 days out of 20 days)The Sea Angel CA [2007]
not likely to be invoked to relieve contracting parties of the normal consequences of imprudent bargainsThe Nema
Force Majeure ClausesChannel Island Ferries v Sealink UK
Frustrating Events - Impossibility

Destruction of concert venue
Taylor v Caldwell [1863]
venue for concert was declared unsafeGamerco v ICM
Unavailability of a person due to perform a contract for personal services can amount to frustration

(concert pianist unable to play due to illness, so contract frustrated)
Robinson v Davison
death of a master watchmaker, to whom the P's son was apprenticed, after one year of a six year apprenticeship contractWhincup v Hughes
Frustrating Events - Illegality

Declaration of war - trading with the ememy - illegal
The Fibrosa
Frustrating Events - Radical Change in Circumstances - Frustration of Purpose

hire a room to watch a coronation procession - cancel - viewing the procession was known to both parties to be the "foundation" of the contract
Krell v Henry
hire a boat to observe naval review by the Kong and to cruise around the fleet, was not frustrated by the cancellation of the review due to the King's illnessHerne Bay Steamboat Co v Hutton
Frustrating Events - Radical Change in Circumstances - Impracticality (English law has been reluctant to allow frustation on this basis)

a contract to build houses, due to last 8 months, took 22 months, due to serious shortages of skilled labour and materials. The contract was not frustrated. Mere hardship and incovenience were not enough. The contractors should have protected themselves by making express provision in contract
Davis Contractors v Fareham UDC HL [1956]
Suez Canal was closedTsakiroglou v Noblee
Similar to aboveThe Eugenia
Limits to Frustration - Self-induced Frustration

D chartered a boat but chose not to allot one of its license to it, no frustration
Maritime National Fish Ltd v Ocean Trawlers
the sinking of a boat intended for use to move an oil rig did not frustrate the contract, because there was another vessel, which could have moved it, but which the D had allocated to another contractThe Super Servant Two
exploding boiler on chartered shipJoseph Constantine Steamship v Imperial Smelting Corp
Limits to Frustration - Express ProvisionMetropolitan Water Board v Dick Kerr
Bangladesh Export Import Co v Sucden Kerry
Limits to Frustration - Event Foreseen

shortage of labour and materials was foreseeable
Davis v Fareham UDC [1956]
seller of goods generally bears the risk of a failure of the source of supplyCTI v Transclear
the event is foreseen doesn't necessary prevent frustrationThe Eugenia
the less foreseeable an event, the more likely it is that the end result will be frustrationThe Sea Angel CA [2007]
Effect of Frustration - discharges the contract automatically from the date of the frustrating event

Loss "lies where it fails" at common law
Appleby v Myers

Chandler v Webster

The Fibrosa [1943]
The Law Reform (Frustrated Contracts) Act 1943

Gamerco v ICM
s1(3)BP v Hunt

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