Frustration Notes
Discharge of a Contract
Frustration
Frustration refers to the situation when a supervening event occurs, for which neither party is responsible, with the result that the very basis of the contract is destroyed so that the venture to which the parties now find themselves committed is radically different from that originally contemplated.
Frustration should not be used: 1. By a contracting party to escape what has turned out to be a bad bargain 2. Free to make contractual provision with respect to eventualities.
Elements of Frustration * The test: does the event make the performance of the contract now radically different? * Radically different performance * Whether performance of the contract in the changed circumstances would be something radically different from that which was originally undertaken. The court will look at the supervening event and what performance would be like if the promise were to be enforced in the new circumstances and the circumstances that existed when the contract was made. It will compare both, and ask if they are radically diff from each other. * Example – Davis Contractors v Fareham UDC (1956) * Neither party at fault * Discharge was to take place by operation of law. If one party is at fault, it is likely that he has breached an express or implied term of the contract. Even in the absence of such a term, the law would not excuse a contracting party whose conduct leads to the event. * Time of Frustration * When a frustrating event occurs, the contract is discharged automatically. The frustrating event may discharge a contract prospectively, in that the time of performance has yet to arrive. (hence parties’ rights will not be left indefinitely in suspense, contract is frustrated as soon as a sensible prognosis of the commercial probabilities can be made). Should not wait till the day of the scheduled performance in order to see how the event will affect the
Frustration
Frustration refers to the situation when a supervening event occurs, for which neither party is responsible, with the result that the very basis of the contract is destroyed so that the venture to which the parties now find themselves committed is radically different from that originally contemplated.
Frustration should not be used: 1. By a contracting party to escape what has turned out to be a bad bargain 2. Free to make contractual provision with respect to eventualities.
Elements of Frustration * The test: does the event make the performance of the contract now radically different? * Radically different performance * Whether performance of the contract in the changed circumstances would be something radically different from that which was originally undertaken. The court will look at the supervening event and what performance would be like if the promise were to be enforced in the new circumstances and the circumstances that existed when the contract was made. It will compare both, and ask if they are radically diff from each other. * Example – Davis Contractors v Fareham UDC (1956) * Neither party at fault * Discharge was to take place by operation of law. If one party is at fault, it is likely that he has breached an express or implied term of the contract. Even in the absence of such a term, the law would not excuse a contracting party whose conduct leads to the event. * Time of Frustration * When a frustrating event occurs, the contract is discharged automatically. The frustrating event may discharge a contract prospectively, in that the time of performance has yet to arrive. (hence parties’ rights will not be left indefinitely in suspense, contract is frustrated as soon as a sensible prognosis of the commercial probabilities can be made). Should not wait till the day of the scheduled performance in order to see how the event will affect the