Contract Law - Frustration

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Starting point – Absolute obligations, the obligations under a contract are absolute and the courts wouldn’t be prepared to discharge or excuse a failure to meet contractual obligations
Paradine v Jane
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Moved onto the implied term theory of frustration – parties can be excused from performance based on their presumed intention
Taylor v Caldwell
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Moved onto the construction of the obligations of the contract – when the court interprets obligations under the contract it will look at any express terms, implied terms and the nature of the contract and surrounding circumstances
Davis Contractors Ltd v Fareham Urban DC
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Frustrating events- Destruction of the subject matter
Taylor v Caldwell
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Frustrating events- Non-occurrence of an event (Quality of the subject matter has to be distinguished in some way and has to be the foundation of the contract for both parties)
Krell v Henry
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Frustrating events- Non-occurrence of an event (Quality of the subject matter has to be distinguished in some way and has to be the foundation of the contract for both parties)
Herne Bay Steam Boat Co v Hutton
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Frustrating events- Illegality, an event may occur after the contract has been performed that makes it impossible to continue, so will radically alter the obligations under the contract
Metropolitan Water Board v **** Kerr & Co Ltd, FA Tamplin Steamship Co Ltd v Anglo-Mexican Petroleum Products Co Ltd, Avery v Bowden
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Frustrating events- Non-availability of the parties due to death or illness
Hall v Wright, Condor v The Barron Knights
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A lease can be frustrated, but the longer the lease the less likely it is to be frustrated
National Carriers Ltd v Panalpina Ltd
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Self-induced frustration- if the supervening event is within the control of one of the parties then the contract won’t be frustrated
Maritime National Fish Ltd v Ocean Trawlers Ltd, The Superservant 2
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The courts are prepared to imply terms into the contract to use as a mechanism for allocating risk
Jackson v Union Marine Insurance Co Ltd
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A radical change of obligations is required – delay and expenses won’t frustrate the contract
Tsakiroglou and Co Ltd v Noblee Thorl GmbH
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This has the potential to operate in a harsh manner, particularly where one party has made a pre-payment before the frustrating event, or has incurred expenses by partial performance of the contract
Appleby v Myres, Chandler v Webster
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Development- the common law limited allowances for the recovery of expenses incurred by partial performance under a frustrated contract, but only where here had been a ‘total failure of consideration’ If the claimant received even the smallest amoun
Fibrosa Spolka Akcjna v Fairbairn Lawson Combe Barbour Ltd
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Section 1(2) means the court has discretion to allow a claimant to offset his expenses against the amount paid or payable before the frustrating event
Gamerco SA v ICM/Fair Warning (Agency) Ltd
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Section 1(3) means that the court has discretion to allow a claimant to recover a ‘just sum’ for the valuable benefit that has been conferred by their partial performance of a contract
First the courts identify and value the benefit, and then decided the just sum to be awarded
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The value of the benefit conferred will be assessed as an ‘end product’ and will be valued after the frustrating event - sets the maximum amount that can be awarded
BP v Hunt (no.2)
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There may be cases where no money was paid, or payable, before the frustrating event and where the partial performance of that contract has not conferred a benefit on the other party
In such a case neither section 1(2) or 1(3) will have any application, so the courts will have to apply the common law principles
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Other cards in this set

Card 2

Front

Moved onto the implied term theory of frustration – parties can be excused from performance based on their presumed intention

Back

Taylor v Caldwell

Card 3

Front

Moved onto the construction of the obligations of the contract – when the court interprets obligations under the contract it will look at any express terms, implied terms and the nature of the contract and surrounding circumstances

Back

Preview of the front of card 3

Card 4

Front

Frustrating events- Destruction of the subject matter

Back

Preview of the front of card 4

Card 5

Front

Frustrating events- Non-occurrence of an event (Quality of the subject matter has to be distinguished in some way and has to be the foundation of the contract for both parties)

Back

Preview of the front of card 5
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