Frustration

• Historically the law held that a party to a contract was bound to perform their obligations, no matter what happened

  The law recognises some contracts are frustrated due to circumstances beyond one parties control
• Paradise v Jane - D was still liable to pay rent, even though he had been forced off the land by an invading army during the English Civil War
• For a successful claim of frustration the following must be shown

  • The frustration event occurred after the contract was made
  • The event is so fundamental it goes against the essence of the contract
  • The event makes performance impossible or radically different
  • The event is entirely beyond the parties' control
• The event must be a result of

  • Destruction of the subject matter including unavailability of a party for services
  • Subsequent illegality, eg contract for goods that then becomes illegal
  • Destruction of the common venture - the essential purpose of the contract can't be achieved
• Key grounds for claiming frustration

  • Impossibility
  • Illegality
  • Radical change in circumstances
  • Frustration in specific situations (Leases, Employment contracts)
• Impossibility - where a party to a contract is prevented from keeping the promise because of an unforeseeable, intervening act they are not liable for breach of contract

  Taylor v Caldwell - it was impossible to complete a contract where the venue had burnt down so the contract was ended, no recompense for expenses while advertising
• Impossibility - what is impossible is a matter of fact for the courts to decide

  Jackson v Union Marine Insurance - Ship ran around for a long time due to perils of sea, implied term of reasonable time, long delay so frustrated
• Illegality - a contract may be frustrated as a result of a change in the law that makes the contract illegal to perform (eg war)

  Shipton Anderson v Harrison Bros - war broke out before grain could be delivered, government demanded the cargo, contract was frustrated
• A radical change in circumstances - occurs when the essential commercial purpose of the contract cannot be achieved

  Krell v Henry - hired a hotel to watch the coronation, coronation postponed so frustrated

  Herne Bay Steamboat v Hutton - Boat was hired to view fleet with the king, coronation postponed, not frustrated as fleet could still be viewed without the king
• Frustration in specific situations: Leases

  National Carriers Ltd v Panalpina - access to premises closed temporarily, no frustration

  Canary Wharf v European Medicines Agency - Brexit would not frustrate EMA's lease as it could still be used / sublet
• Frustration in specific situations: Employment contracts

  Robinson v Davidson - Pianist too ill to perform, contract was conditional on pianist performing, contract frustrated

  Condor v The Barron Knights - Contract required band to work 7 nights a week, dr advised drummer to work 4, contract frustrated
• Limits to frustration

  • Self induced frustration
  • The contract becoming less profitable
  • The event naming a foreseeable risk, or the event was mentioned in the contract
• Self induced frustration - frustration will not occur when the event is within the control of one party

  Maritime National Fish v Ocean Trawlers - allocated fishing licences to its own board, no longer needs another boat, no frustration as its in the party control

  Gamero SA v Missouri Storm - Stadium was declared unfit and licence was withdrawn, frustrated as bit under control of either party
• Contract becoming less profitable is not frustration

  Davis contractors v Fareham UDC - price of building increased by £20,000+, not frustration as did not radically change contract

  Tsakiroglou v Noblee Thorl - Suez Canal closed so shipment couldn't be made, no frustration as other more expensive route was available
• If the event is a foreseeable risk and is mentioned in the contract

  Amalgamated investment v John Walker - no frustration as risk of old houses becoming listed and dropping in value is in all contracts

  Armchair Naswercall v People in Mind - For an event to be frustrated 'a supervening outside event which the parties could not reasonably be thought to have foreseen a possibility'