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Summary Unit 6 - Frustration and Contractual Certainty
In-depth notes on Frustration and Contractual Certainty, a key topic in Contract Law, collated from lectures, tutorials and textbooks.
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Contract Law – Prepare 6 30.11.21Unit 6 – Frustration & Contractual Certainty
Reading – Unit 3: Sub-Unit 2 Part 4 of Contract Law Manual
Part 4 – Discharge by Frustration
1. Introduction
A contract may be frustrated if unforeseen event occurs after the contract has been formed
which was not the fault of either party and which makes:
o The contract impossible to perform, or
o The performance of the contract radically different
Contracts become frustrated when:
o The subject matter of the contract is accidentally destroyed so it is impossible to
perform the contract (unless the contract states what happens in event of fire)
o A person vital to the performance of the contract is not available, making the
contract impossible to perform
Contracts don’t become frustrated when it is merely less profitable or more expensive for
one to perform the contract
If a contract is frustrated, there is no breach of contract in relation to the frustrating event,
as it isn’t their fault
o The event occurring outside the control of the parties (frustrating event) as made it
impossible to perform the contract
If a contract is frustrated, it comes to an end automatically at the time of the frustrating
event and the parties don’t have to perform their future obligations
As there is no breach of contract when a contract is frustrated, the remedies associated with
breach of contract (e.g. damages) will not be available
2. The Original Common Law Rule
The idea that a contract will be frustrated if it becomes impossible to perform wasn’t always
the legal position
Originally, at common law, if a party assumed an absolute obligation in a contract (i.e. the
obligation was not qualified or modified in any way), then if circumstances made
performance of the obligation impossible, he would still be liable
o Idea is that he should have protected himself by making sure a suitable provision
was included in the contract
o If he failed to do so, the court would not allow him to escape from his obligations
This approach was adopted in the case of Paradine v Jane (1647) – C was claiming arrears of
rent from D, who had been forced off land by a hostile army and couldn’t pay
o Court held that D was still liable to pay rent, which was deemed harsh
o This was modified in mid-1800s
3. Modification of the Original Common Law Rule
3.1 Implied Term Theory
1
, Contract Law – Prepare 6 30.11.21
The modern law of frustration is said to originate from Taylor v Caldwell (1863)
Here, C hired a music hall from D for a few days for the purpose of giving a series of concerts
Before the date of the first concert, the music hall was destroyed by fire and the concerts
couldn’t take place
o Neither party was at fault – the contract was discharged by frustration
o Music hall was essential for the fulfilment of contract (implied condition that parties
would be excused if performance became impossible)
3.2 Construction Theory
The idea of frustration resting on a term implied between parties was dismissed as a fiction
by HL in Davis Contractors Ltd v Fareham Urban District Council [1956]
o In most cases, the parties could not have had such an intention or knowledge
Lord Radcliffe:
o “when the event occurs…the meaning of the contract must be taken to be, not what
the parties did intend (for they had neither thought nor intention regarding it) but
that which the parties, as fair, and reasonable men, would presumably have agreed
upon if, having such possibility in view, they had made express provision as to their
several rights and liabilities in the event of its occurrence…”
4. Review
Frustrating events must occur after the contract has been formed
Frustrating events are outside the control of the parties to the contract – Taylor v Caldwell
Doctrine of frustration cannot be used to escape from a bad bargain
5. Events
5.1 Unavailability of a Specific Thing or Person Vital to the Contract
Already explored Taylor v Caldwell case whereby a person who is vital to the contract
becomes unavailable can cause frustration
Contracts become frustrated when considering:
o Length of the contract
o Length of period of absence
o Must the contract be performed by that particular individual, or can a substitute do
the work?
Unavailable of a person vital to the contract caused frustration in Morgan v Manser [1948]
and Condor v Barron Knights [1966]
5.2 Non-Occurrence of a Fundamental Event
If a particular event taking place is essential to the contract (i.e. the contract is dependent
on it) and the event is cancelled, then this may frustrate the contract
Cases of how this concept works involves the postponement of the coronation of Edward VII
Krell v Henry [1903] – the contract had been frustrated
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