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Contract law - frustration - Coggle Diagram
Contract law - frustration
the sea angel - applciaiton of the doctrine of frustraiton requires multi factorial approach 2007
1) what are the terms fo the cotnract
2 - what is the contex t on which the contract was made
3 - parties kknowledge, expectations and contentions, in particilar as to rislk
4 - nature of the supervening event
5 - parties reasonable and objective;ly ascertaonable calculations as to the possibility of future performance in the new circumstances
WHAT IS THE DEFINITION OF FRUSTRATION`
frustration takes place when, after the contratc is made, and without the failt of either aprty, a superveninge event takes place which triggers a radical change in the obligations of parties. It must also be unjust to hold them to a new obligation
after contract made
without fault of aprties
supervening event takes place
triggers a radicial cjange of the obligatipons of parties
it must eb unjust to hold them to the new obligatoion
it esentially changes the terms of the contracy/hinders with them
consrequences of a finding of frustration
contract is discharged
the frustrating event terminates the contract automatically, w/o nmeed for acrtion by either aprty
common law deals with consrequences
statutory regime = law reform frustrated cotnracts act 1943
common law
parties released from all future obligatiosn from date of frustrratingg event. Any obligatiosn which ahd already arisen under contract mist be performed
old law chandler v webster
d couldmnt recover the money which ahd been paid in advance
fibrosa spolka v flcb
p ordered some machinary from d for delivery in poland paying £1000, in outbreak of ww1 in 1939 the contratc became frustrated, P asked fr return of 1k btu d refused cos substantial maount of money spent in order
held p allowed to revoer 1000 cos total failiure of consideration
overruled chandler, p didnt recieve anything
old law - paradine v jane - absolute obligation to perform
HOWEVER, the case of taylor v cadwell established the doctrine of frustration
someone had hried a concert hall, agreed to rent it out for a perforamnce. before the perfoemance coudl take place the building was burnt down due to a lightning strike, neither party at fault
the superservamt two = main principles fo frustration
supervening event, trigers a radical change in oblugations of aprties
2 - establish the frustrating act - what events may fristrate the contract
destruction of subejct matter
taylor v caldwell
non occurance of event
inability to comply witj s[eciofoic ,ammer pof [erfor,amce
unavailability
jackson v union marine insurance - unabvailability
supervening illeaglity
under the radical change in obluagtions test, courts must
construe the contracy in light og its natue ramd surroinding circumsyances
then, assess if aprties obligations changed due to subsequent supervening event
davis cotractors v fareham urban district council
what triggers the doctrine of frustration is nto a radical cjange in circumstances but a radical change in obligations of aprties
taylor v caldwell
destruction of subject matter - physical impossibility
jackson v union marine insurance - unavailability
a ship owner entered intoa chater party with a charterer
the shipw as to deliver mails to sanfrancisco but ran aground, as a result teh charterer pulled out of the charter party
c brought a claim against its isnurere for loss of freight by peril of the sea
held that although the ship would have been ready after repairs, tej delay would have been too long for the charterers to make shipment - tehre was an impleid condition that the ships should have arruved in time to pick up the nails
non occurance of event
the key question is whetehr the non occurence of the ebent rendered the object of the contract defeated
krell v henry
kings coronation, cancelled, teh court said that it was frustration, entiher aprties fault but the contraact was not going to be performed
herne bay steamboat co v hutton
contratc not cancelled by cancellation of the review, which was not the object ofteh contratc but merely a motive for hire of boat - d bound as it was still possible for the fleet to take place
inability to comply with specific manner of performance
where a contract requires a specific manner of performance, contract may be frustrated if it becomes impossible to comply. HOWEVER, where the manner of perforamnce is expectetd but not mandatory no frustration - SUEZ CANAL CASES
The eugenia
assuemd voyage through suez canal. contract included a war clauses, forbidding cjarterers to bring vesselw ithin dangerous zone, without workers consent, trapped in suex canal, on release charterers claimed frustration
no fr4ustraiton, both foresaw the possibility of teh event occuring thriugh inserting war clause, faield to state what would happen on event actually occuring
Taskorpglaou and co ltd v noble
contratc for sale of sudansese groundnuts shippedf rom sudan to hamburg via suieuez canal, the canal clos9ed on the day of shipment, and claimed contract frustration
held that there was no frustration as conttract still capable of eprforamnce via another route, teh goods could have survived a longer joruney
MANNER OF PERFORMANCE NOT MANDATOIRY
Gamerco SA v ICM fair wantring agency ltd
a cotntracted with D to organize a cocnert for guns adn roses, venueu cdeclared iunsgae, no other could be found in time, cocnert canvellde, held that ocntratc frustated
temproary unavailabilty
where subejct amtter of contract nto destoryed byt unavaikable, a finding of frustration depends on period of unavailability
if its a short time, contract is lilely to subsist. the longer the period the more likely that the coury woil fiund frustration
before deciding on issyue of frustraiton, courts must construe the contract in light of circumstances
candor v barron knight
a drummer in a pop grpip was employed to work 7 days a week. after falling ill, advised to work only limited numebr of nights a week. Subsequently band dismissed him, he sued for wrongful dismissal
held, no wrongful dismissal and contract frustratted by illness
supervening illegality
law may render the performance of contrcat illeagl, occurs once a contract has been entered into, may give rise to frustreation
fibrosa spoka v fairnarin lawson
contract became frustrated after it 2was entered into = where illeaglity exists prior to or at the time of contracting, principles govenring illeagl contracts apply
sale of goods act 1979
sale of goods is subject to thsia ct, whcih privides for circymstances where the contract for sale can be frustrated
specific goods are tailor made for a single customer, while generic goods are produced irrespecitve of the final customer who will buy them
s7 of act
where there is ana greement to sell specific goods, subsequently goods without any fault of seller or buyer perisih ebfore risk passes to buyer,a greement is avoided
exception
only applies to specific rather than generic goods
lastly
are tehre any fatcors infliencing the oepration fo frustration
expressly provided for in the cotnract - force majeure clauses
force majeure - sueprior force - express risk allocaiton of clauises
provides list of events sichj as natiural disasyers earthqaukes floods pandemics war, makes provision for what happens when aparituclar event occurs
must be expressed in clear and unambiguous terms, construed narrpowly
metropoltiamn water board v dick kerr and cp ltd
ec int his case interpreted narrowly, only intednded to cover temproary ostacles, contract frustrated
if clause is ambigous, courts will construe contra proegerentem
self induced frustration
if an event that renders perforamcme imder ontract frustrated due to a aprtys actions, then the frustration cannot be relied upon
maritime national fish ltd v ocean trawlers
fishing baots iusing otter trawls netting requiired a licsnese from the ministry of fishes. d woshed tp p[eraye 5 boats only hranted 3 licenses = held no f4rsutation as d could have apploiied one of three licenses to boat in question
the super servant two
d contracted to carry cs ring from japan to rotterdam on either ss 1 or 2
allocated tp ss2, but it sank
there was an lt vesserl so that the sinking of supers ervant two didnt bring contract autoatically to an end
law rreform, frustrated contract act 1943
operates where a contract is frustated by dealing with consequences of frustraotpm
s1(2) recovery of momey paid
all sums paid by the payer before tjhe frustratonbg ebemt are recoverable;e
all sums pauable by tthe apyer before the frustrating ebent cease to be payable
s1(2) cpmpensation payable for expenses incurred in performance of contract
if the payee incurs expense before the frustrating event or int he performance of the contratc, court may allow the payee to retain or recover the whol;e or part fo the sums paid or pauanle
payee may not recoer an amount in excess of expenses so incurred
how would this influence fibrosa spolka v flcb 1942
s1(3) financial adjustyments
if party obtains valuanble beengit for other aprty in performance of the contract before the furstating event, court may ward the performing party a sum it considers just, having regard to all circumstances
sum nmust not exceed valye f benefit
to assess what is just ciurt must consider
all circumsytances = amount of expenxe incirred u [artyu recoevomh enemfors. effects of frustrating ebemt