Frustration

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  • Created by: Launston
  • Created on: 14-05-14 13:28
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  • Frustration
    • Definition
      • An event occurs after the formation of the contract which renders further performance impossible, illegal or radically different
    • Justifications
      • Implied Term
        • Taylor v Caldwell
          • A term is implied by the parties that the subject matter will remain in existence for the duration of the contract
            • Gives effect to parties intentions and upholds freedom of contract
      • Construction Theory
        • Davies Contractors v Fareham
          • Criticism of implied term: how could parties have provided for something they did not foresee
            • Has the event rendered performance radically different from the contractual duties?
    • Impossibility
      • Physical destruction of subject matter - Taylor v Caldwell
        • Goods perishing before sale but after agreement - s.7 SOGA
          • Death or illness in personal service contracts - Robinson v Davison
            • Unavailability - Jackson v Union Marine Insurance - BP Exploration v Hunt
              • Frustration of common purpose of both parties - Krell v Henry compared with Herne Bay Steamship Co
    • Illegality
      • Change in the law - Denny, Mott and Dickson
        • Times of war - Islamic Republic of Iran Shipping Lines
    • Radically Different
      • Not frustrated due to hardship, inconvenience or material loss
        • Amalgated Investment & Property Co
    • Consequences
      • Hirji Mulji - brings contract to an end automatically
    • Limitations
      • Frustration was within the contemplation of the parties and they did not provide for it - Amalgated
        • Force Majeure Clauses - The Eugenia
          • Self-induced frustration - The Super Servant Two
    • Financial Implications
      • Common law
        • Chandler v Webster
          • Money due to be paid after event not payable but pre-payment could be recovered and remained payable
            • Cutter v Powell
      • Law Reform (Frustrated Contracts) Act 1943
        • Only deals with consequences of frustration
          • Regulates recovery of money paid or payable
            • Compensation for expenses incurred
              • Financial readjustment where benefit has been obtained
                • Benefits have to be paid for, court can award a just sum
                  • Courts aim to prevent unjust enrichment
                    • if unjust enrichment has occurred
                      • Identify and value benefit
                        • Decide sum to pay
            • Money paid is recoverable, money payable is no longer payable, court can reward party if they choose - Gamerco
        • Does not apply
          • Express provisions for consequences in contract
            • Obligations are wholly performed and can be severed from the rest

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