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Week 7 - Frustration (Classes of frustration do not fall into the trap…

- - - - Cooper & Sons v Nielsen & Maxwell [1919] VLR 66
        The British company intended to source the steel bars from a foundry in Germany. As you can probably guess from the date of the case, the British company found that they were no longer able to source the bars from Germany, because the First World War commenced, and trade with Germany was forbidden.
        the supplier could have met their contractual obligation by sourcing the steel from somewhere else – the United States, for instance. The contract was not frustrated: it was just a lot more inconvenient.
  - - - Bank Line Ltd v Arthur Capel & Co [1919] AC 435
        In this case, Bank Line agreed to lease a brand new steamer (boat) for Arthur Capel, for a period of twelve months. However before the boat was delivered, it was requisitioned by the government, for the duration of the war. At that point, it would seem fairly clear that the contract had been frustrated. However a few months later, Bank Line received an offer from a third party, that wished to purchase the steamer outright, if it could be released from the government’s service. Bank Line then made an arrangement with the government, which agreed to release the steamer if a replacement could be provided. This went ahead, and the steamer was sold.
        Of course, Capel was unimpressed, because the steamer had not been detained for the duration of the war; in fact, it had been detained for just a mere few months. They sued, and Bank Line responded that the contract had been previously ended by frustration.
        The court found that the contract had indeed been ended by frustration, because at the time of the frustrating event, it had not been possible to predict how long the steamer would be unavailable; all that was known for sure was that the delay was likely to be extensive, as it was to last for the entire duration of the war – more than likely, the delay would have been longer even than the period of the lease. Had the likely delay been less, then the event would not have been frustrating.
- - - - Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour [1943] AC 32
        In this case, there was a contract for the supply of machinery to the Fibrosa company which was in Poland. The company paid £1000 as a deposit, but then Poland was invaded by Nazi Germany, and the contract was frustrated. No equipment was ever delivered, so the court held (and it seems quite clear) that there was a total failure of consideration. In this event, Fibrosa obtained a refund of their £1000.
    - - Baltic Shipping Co v Dillon (1993) 176 CLR 344
        Mrs Dillon departed on a 14 day cruise, but the cruise ship sank on the tenth day. This particular case was ultimately resolved on the question of breach, as it was not held to have been a frustrated contract. However let us imagine, for a moment, that it had been held to have been frustrated by the ship’s sinking. In this circumstance, Mrs Dillon would have been entitled to … nothing. Not a penny. The reason for this would have been that there was not a total failure of consideration. After all, the cruise line had provided ten of the fourteen days’ cruise they had been contracted to provide.
- - - - First, we note that the frustrating event must occur without the fault of either party.
      - Second, we note that the contractual obligation must be incapable of being performed.
      - Third, and finally, we come to the reason why the obligation must be incapable of being performed: it must be incapable of being performed because the circumstances have changed, and the effect of this change of circumstances would make the obligation a thing radically different from that which had been contemplated when the contract was originally made.