Frustration

• What happened in Taylor v Caldwell?

  C agreed to hire music hall. Six days before the date, hall was destroyed in fire
• What was the ratio in Taylor v Caldwell?

  the contract had ended because it had become impossible to perform
• When will a contract be frustrated?

  makes the performance of the contract:

  1. impossible
  2. illegal, or
  3. radically different
• What happens to a frustrated contract?

  the contract automatically comes to an end without imposing liability on the party who is unable to perform its contractual obligations
• What two situations show that performance becomes impossible?

  1. the subject matter may be destroyed (Taylor v Caldwell)
  2. In a contract for services, one of the parties could become unavailable (Robinson v Davison)
• What situation results in the performance becoming illegal?

  a change in the law makes performing the contract illegal (Fibrosa v Fairbairn)
• What happened in Fibrosa v Fairbairn?

  the outbreak of war meant that it became illegal to trade with the enemy. This included occupied countries like Poland
• What does it mean when performance becomes radically different?

  if the event destroys the main purpose of the contract for both parties, the contract may be frustrated.
• What two cases are used for 'radically different'?

  1. Krell v Henry
  2. Herne Bay Steamboat v Hutton
• What happened in Krell v Henry?

  D agreed to hire a room to view King's coronation. Coronation was then cancelled
• Why was the contract in Krell v Henry frustrated?

  The event was the main purpose of the contract for both parties
• What happened in Herne Bay Steamboat v Hutton?

  D hired a boat to see the King review his fleet of ships as part of the coronation celebrations
• Why was the contract in Herne Bay Steamboat v Hutton not frustrated?

  It was still possible to view the ships. All that was missing was the king's presence.
• What are the 4 limits on frustration?

  1. "Force Majeure" clause
  2. No frustration if contract has simply become less profitable or more difficult to perform
  3. event was foreseeable
  4. self induced frustration
• What is a force majeure clause?

  a clause which allows a party to suspend or terminate its obligations under the contract in certain situations
• Give a case for less profitable or more difficult to complete

  Davis Contractors v Fareham
• What happened in Davis Contractor v Fareham?

  C agreed to build houses for D. C faced a shortage of workers and materials so incurred additional costs. The contract was not frustrated
• What happened in Amalgamated Investment v John Walker and Sons?

  C agreed to buy an old building for redevelopment after receiving assurances the building was not listed. The next day, the property became listed.
• Explain self induced frustration

  A contract will not be frustrated if the event was within the control of one of the parties (The Super Servant 2)
• What happened in The Super Servant 2?

  Contract for moving an oil rig was to be carried out by D using one of his two ships. One of them sank. The contract had not been frustrated as D could still use the other ship
• What is the effect of frustration?

  to discharge the contract automatically at the moment of the frustrating event. Each party is excused from future obligations under the contract