OCR A2 Law - The Law of Contract - Frustration (6)

  • Created by: Majid
  • Created on: 17-05-13 10:08

Frustration (6)

Summary of the Act: It deals with 3 main areas - 1. Money paid in advance; 2. Work done in advance; 3. Financial rewards when a valuable benefit is conferred.

"The Law Reform (Frustrated Contracts) Act 1943": 

S1 (2): Money paid in advance can be recovered, unless the payee incurs costs. Then at the courts discretion, the payee can retain some expenses.CASE: "Gamerco v ISM". In this case The Stone Roses paid a fee in advance, but the contract got frustrated. HELD: The courts didn't use their discretion and therefore the money was returned to the Spanish promoter. S1 (3): Party gains a valuable benefit before the frustrating event then at the courts discretion, they will award the other party a sum of money they see fit. CASE: "BP Exploration v Hunt". In this case BP gave Hunt £10 Million to explore for oil. Colonel Gadaffi came into power which ... frustrated the contract. BP asked for the £10 Million back plus more saying Hunt gained a benefit. HELD: This decision was made at the courts discretion and Hunt had to return the £10 Million only. AO2: This section of the Act can also be used to award money for part-performance. Since the Act very few cases have arisen on the 1943 Act. This could be due to the fact it isn't needed or alternatively, parties negotiate agreements when the contracts have been frustrated.

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