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Discharge of a contract - By Frustration - Coggle Diagram
Discharge of a contract - By Frustration
What is frustration?
an event that terminates the contract, which occurs through no fault of either party, and must make the performance of the contract impossible.
Situations that lead to a contract being frustrated
Destruction of subject matter
Government Intervention
Non-occurrence of event central to the purpose of the contract
Subsequent Illegality
Personal incapacity of one of the parties
Limits to the doctrine of frustration
The event must occur after the contract has been entered into
There must be no commercial purpose left in the contract
The parties must not have been foreseen
The frustration must not be self-induced by one of the parties
There is no frustration of the parties have provided for the frustrating event in the contract
A contract that becomes onerous is not frustrated
The consequences of frustration
When the frustrating event occurs both parties are released from any contractual obligations
The consequences of a contract being frustrated are governed by the Law Reform Act 1943
All money still owing ceases to be payable
Money paid in advance of performance of the contract is recoverable
Any expenses incurred - any expenses are recoverable up to the frustrating event. Cannot exceed amount of money paid.
Recovery of money for a value benefit - if a party has received a benefit from the other party before the contract was frustrated, the court may order payment be made to the party receiving the benefit.