Post on 04-Jun-2018
transcript
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Frustration
It is often the case that whilst some
risks have been foreseen and catered
for in the contract, there may be someunforeseen risks, and this is unplanned
for risk. Should things go wrong, the
courts may have to decide which of the
contracting parties is to bear the risk,
and hence any losses, in question.
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Some key cases on
mistake and frustration ell v !ever ros !td "#$%
Solle v utcher "#&'.
(avis )ontractors case "#&*
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A possible definition of
frustration is: + contract is frustrated where after the
contract was concluded unforeseen
events occur which make performanceof the contract impossible, illegal orsomething radically different from thatwhich was in the contemplation of the
parties at the time they entered thecontract and neither party must be atfault.
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Origins and justification of
frustration aradine v -ane "*/
0aylor v )aldwell "1*$
2ational )arriers !td v analpina32orthern4 !td "#1"
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Why the courts are reluctant toallow frustration to be a
successful defence
0he courts dont want frustration to be seen
as an easy way out of
a bad bargain
made by one of the parties 5 this can be
seen in the
case of (avis )ontractors !td v 6areham
7() "#&*.
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Why the courts are reluctant toallow frustration to be a
successful defence(ue to the ability to insert a force ma8eure
clause into the contract. 9ith one of thesethe contract will not be terminated by
frustration of contract if the event that
happens is in the list in the force ma8eure
clause. 0hus, the effect of a force ma8eureclause is that the contract S0I!! S0+2(S 5
I0 IS 2:0 6;7S0;+0
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Three broad categories of
frustration
impossibility of performance
illegality of performance
radically different performance from
that contracted for.
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Where performance of the
contract is Impossible
+ classic case for physical items is 0aylor
v )aldwell "1*$
+ case for personal services is ;obinson
v (avison "1/"
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Where it would be Illegal
to perform the contract
In the case of 6ibrosa Spolka +kcy8na v
6airburn !awson )ombe arbour !td"#$ 3the 6ibrosa case4 a contract to
sell machinery to the buyers in oland
was frustrated when oland was
occupied by the =ermans during 9orld
9ar 0wo.
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adically different
performance0wo contrasting cases are
>rell v ?enry "#'$ and
?erne ay Steam oat )o v ?utton "#'$.
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Instances when frustration
will not apply!@ when the alleged frustrating event is
self induced
@ when the contract has specificallyprovided for the alleged frustratingevent, and
@ when the alleged frustrating event wasforeseen by the parties at
the time the contract was made
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'The Super Ser$ant Two( )**+!
0he courts have not ruled on the degree of faultthat amounts to self induced frustration but it islikely that a negligent act by the defendant will
amount to self induced frustration because whensomeone is negligent and an adverse eventhappens it cannot be said that the allegedfrustrating event was altogether outside the control
of either party, nor unforeseen. 0his case alsoeAplores the issue of the defendant having achoice in what he does in relation to frustratingthe contract.
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Where the contracte,pressly pro$ides for thealleged Frustrating e$ent
If a clauseBterm in the contract actually
eApressly makes reference to the allegedfrustrating event then the event generally
cannot frustrate the contract because it is
not an unforeseen event. ut, see Cetropolitan 9ater oard v (ick, >err and
)o "#"1
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Where the alleged
frustrating e$ent wasforeseen by the parties whenthe contract was made
+n event is foreseeable and will prevent the
contract being frustrated only where it is one
which any person of ordinary intelligencewould regard as likely to occur when the
contract was initially made.
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-ffects of frustration
!aw ;eform 36rustrated )ontracts4 +ct
"#$.
)handler v 9ebster "#'
6ibrosa case "#$
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A claim to reco$er .O/-0 thatwas paid or was payable beforethe frustrating e$ent happened
Section "3%4 states that any sums +I(
before the frustrating event are recoverableand any sums that were +D+!< before
the frustrating event are no longer payable.
ut, this is modified 5 see=amerco S+ v I)CB6air 9arning 3+gency4
!td "##&
A l i t th l f
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A claim to reco$er the $alue of1oods Supplied or Ser$ices
pro$ided before the frustratinge$ent happened
Section "3$4 is quite complicated but means
that where one party had conferred avaluable benefit on the other party 3other
than a payment of money that is covered by
"3%44, the one conferring the benefit shall be
able to recover a 8ust sum which should not
eAceed the value of the benefit conferred.
See
v ?unt "#/#
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Appleby $ .yers )234
In +ppleby v Cyers "1*/ the plaintiffs agreed toerect machinery on the defendants premises forE. 9hen the work was nearly finished there
was a fire on the premises that totally destroyed allthe work done to date. 0he plaintiffs brought anaction for E"# for work done and materialssupplied. It failed. 0he contract was frustratedand so both parties were eAcused from theirobligations under the contract. +s such thedefendants did not have to pay for servicesalready rendered.
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Sections 5'6( and 5'7(
7nder section %3$4 the +ct will not be appliedwhere the parties to the contract have included inthe contract a clause detailing what is to happen ifa frustrating event occurs.
7nder section % 34 if a contract can be brokendown into bits and some of the bits have been
performed, then these performed bits can besevered from the contract and the frustratingevent and the +ct will only apply to the unseveredbits.