Frustration

• discharge by frustration

  -> frustrating event occurs before a contract can be completed, something happens to make the contract illegal, impossible or pointless

  to claim frustration

  • event causing frustration happened after the contract was agreed
  • so fundamental it goes beyond what the parties expected when making the contract
  • makes it impossible/very different to do what the contract said
  • is completely out of the control of both parties
• impossibility


  -> impossible to carry out the contract

  taylor v caldwell

  jackson v union marine insurance co

  robinson v davidson

  condor v the barron knights
• subsequent illegality 


  -> event makes contract illegal to fulfill e.g. banned imports

  denny mott and dickinson v james fraser -> contract importing goods frustrated when goods became illegal

  re shipton anderson v harrison bros

  metropolitan water board v dick kerr
• radical change in circumstances

  -> if the reason for having the contract disappears or becomes pointless

  krell v henry -> king did not attend coronation

  hene bay steam boat v hutton -> king did not attend but main event could go ahead
• limits on frustration

  1. self induced -> if one party causes the problem on purpose

  maritime national fish v ocean trawlers // gamerco SA v ICM fair warning

  force majeure -> clauses in contracts that exclude delays or non performance in extraordinary events - if not frustration may still work

  2. less profitable -> davies contractors v fareham UDC // Tsak iroglou and Co v nobleethon gmbh

  3. foreseeable risk -> amalgamated investment v john walker and sons

  -> courts careful about finding frustration -> armchair answer call v people in mind
• remedies - common law

  -> terminate contract at point of frustrating event

  • anything done/ paid is lost - chandler v webster
  • anything to be done / paid can be ignored - krell v henry
• remedies - law reform (frustration) act 1943

  -> s1 (2) - may award injured party expenses incurred before contract discharge - gamerco sa v icm fair warning

  -> s1 (3) - if one party benefitted from frustrating event, court may order a just sum to fairly compensate - bp exploration v hunt

  -> s1 (4) - court considers overhead expenses, personal work/services, money already paid/due, and compensation at courts discretion for work and expenses before frustrating event -> ensures fairness