Cards (25)

  • Taylor v Caldwell: Contract ended when a concert hall burnt down the day before the concert, making performance impossible, known as frustration
  • Robinson v Davison: Contract for services where one party could become unavailable (e.g., piano player falling ill on the day of a concert), leading to frustration as no one is at fault and the contract cannot be performed
  • What can frustrate a contract:
    • Performance becomes impossible
    • Performance becomes illegal
    • Performance becomes radically different from what both parties originally intended
  • Fibrosa v Fairbairn: Law changes suddenly, making it illegal to fulfill the contract (e.g., outbreak of war making it illegal to trade with the enemy)
  • Krell v Henry: Event (coronation cancellation) was the main purpose of the contract, rendering it pointless to carry out
  • Limits on frustration:
    • Contract becoming less profitable or more difficult to complete is NOT a reason for frustration
    • "Force majeure/ act of God" clauses do not lead to frustration as parties have agreed on what happens in such events
  • Consequences of frustration:
    • No more payment, work, or obligations; the contract is discharged by frustration
    • Recovery of money under S.1(2) of the Law Reform (Frustrated Contracts) Act 1943 if money was paid in advance
  • Gamerco SA v ICM/ Fair Warning: Money is returned but the stadium keeps some to cover expenses and tickets as it was not their fault either
  • S.1(3) of the Act allows for benefits other than money to be recovered, such as work done or something of value that isn't money
  • BP v Hunt (No.2): Hunt was overpaid, so BP can recover from Hunt, receiving a "just sum" due to the overpayment, and legal costs are also covered
  • Frustration in contract law occurs when something unexpected happens that prevents performance, not due to anyone's fault
  • Taylor v Caldwell example: a music hall burnt down, making it impossible to have a concert when the venue doesn't exist
  • Conditions for frustration:
    • Impossible: e.g., Taylor/Robinson v Davison - can't perform if sick (entitles to a refund)
    • Illegal: e.g., Fibrosa v Fairbairn - refusing to supply Nazis due to legality
    • Radical difference: when the contract can be carried out but is so different from what was agreed upon
  • Not frustration if there's a "force majeure" clause for events like war or terrorism, which must be included in the contract
  • Foreseeable events that should have been anticipated won't end a contract; insurance should be bought to cover such risks
  • Self-induced frustration, where the frustration is within one's control, doesn't count as a valid reason for contract frustration
  • Frustrated Contracts Act 1943:
    • S.1 (2): Allows recovery of money paid in advance if the contract is frustrated
    • S.1 (3): Deals with valuable benefits received but not paid for, entitling a "just sum" to be decided by the court
  • Taylor v Caldwell example: music hall burnt down, can't have a concert when the venue doesn't exist (impossible situation)
  • Frustration in contracts can occur when the situation becomes impossible, illegal, or radically different from what was agreed upon
  • Examples of frustration:
    • Impossible: Taylor/Robinson v Davison - can't perform if sick (entitles to a refund)
    • Illegal: Fibrosa v Fairbairn - refused to supply the Nazis as it was against the law
    • Radical difference: Krell v Henry - unable to use the rented space for the intended purpose due to unforeseen circumstances
  • War is considered an unforeseeable event that can lead to contract frustration
  • Not considered frustration if there is a "force majeure" clause for events like war or terrorism, which must be included in the contract
  • Foreseeable events that should have been anticipated won't end a contract; insurance should be bought to cover such risks
  • Self-induced frustration, where the frustration is within one's control, doesn't count as a valid reason for contract frustration
  • Frustrated Contracts Act 1943:
    • S.1 (2): Allows recovery of money paid in advance if the contract is frustrated
    • S.1 (3): Deals with situations where a valuable benefit has been received but not paid for, requiring a "just sum" to be paid