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The Law Reform (Frustrated Contracts) Act 1943 (result of the somewhat…
The Law Reform (Frustrated Contracts) Act 1943
result of the somewhat unsatisfactory outcome in Fibrosa Spolka Akcyjna,
a fair means of identifying who should bear the loss
The Act sought to provide
who should be entitled to recover damages and in what circumstances.
enacted, perhaps not surprisingly, during wartime
lays down a complex set of rules governing the consequences of frustrating events for many types of contract
in so far as they relate to acts carried out, expenses incurred, and obligations performed up until the point of the frustrating event
there are few cases decided under the Act.
as in the majority of commercial contracts, the parties make express provision for what is to happen
the 1943 Act covers three main areas:
recovery of money paid in advance of the contract: s1(2)
recovery for work already completed under the contract: s1(2)
recovery for a valuable benefit that has been conferred through partial performance: s1(3)
potential to mitigate the harshness of the rules of frustration, s1,
The sums awarded are discretionary and limited to what the court believes to be fair in the circumstances; as a result a party might not recover all losses actually incurred.
The court only apportions losses where there is also an obligation to pay money in advance of the contract.
s1 was applied is Gamerco SA v ICM/Fair Warning (Agency) Ltd [1995] 1 WLR 1226
cancellation of a pop concert due to the government, for safety reasons, closing the venue.
Gamerco recovered what was paid in advance