10 Feb 2003

Handout 28 - Frustration

Sanctity- Must stick to your promise

1 Question) Is the breach serious?

Taylor v Caldwell (Pg 4, Handout 28)

D agreed to provide musical and venue for performance. The hall is burned down by fire before performance. P argue for the Sanctity. Court held that the Contract upheld due to frustration.

“Coronation”Herne Bay v Hutton2 expressed purposes:1) Boat to hire to able to see the sea2) To see cruise performance

But the King is sick, the performance is cancelled.The King is already sick but both parties don’t know.

Court held it is not Frustration, since the boat is still there and can serve the purpose.

BrownswordPrivate Use Contract

Herne Bay v HuttonCommercial Use – Because Herne can sell ticket for the

Davis v Fareham(minor value can’t easily find in textbook)

78 houses sell at ₤92,000because the shortage of labour?? take 22 months to completeHoL held that Contract no frustration.Since the Contract is not fundamentally incapable to carry out. Only shortage of material …. Is not sufficient to, not serious enough to classify as frustration.

Amalgamated Properties v Walker

J. Poole, “Casebook on Contract”, 5th ed., Blackstone Press Ch 11 Pg 599

Lost ₤1.7 millionClaim 1) Common Mistake Discussions VoidCourt held since “Listing” is not serious enough

The developer can buy the things but less profitable, not enough to classify as “Frustration”.

The doctrine only applies to “supervening”exists. When the event occurs before the contract frustration cannot apply though mistake might (cf Griggith v Brymer)

Griggith v BrymerVoid for mistake

The consequence is quite different between “Frustration” and “Void by Common Mistake”

Situations where Frustration no applicableJoseph Constantine v Imperial SmeltingThere can be no discharge by supervening impossibility if the express terms of the contract bind the parties

P.5Walton Harvey v WalkerCompulsory

Foreseeable different from Foreseen

P52 conflicting statement – Lord Denning MR (obiter): “It has often been said that the doctrine of frustration only applies ether the new situation is “unforseeable”

Expressed not frustrationCan foreseen not frustrationReally possible maybe frustrationRemote possible maybe frustration

“ Self-Induced Frustration ” -----****** Very important Eg Taylor v CaldwellIf Taylor burn the house by himself, not frustration of courseBut carelessly burn by himself or his staff, then maybe not frustration

Maritime National Fish v Ocean TrawlersPg 5 (Privy Council)Appellant

5 licenses applied but got only 3 licenses. For the two ships which do not have license claim to be frustratedCourt said this is not frustration since it is Self-Induced.

Super Servant (2)Lauritzen v Weissmuller

D agreed the carry P’s “Dan King” “Transportation Unit”Contract said the “Dan King” can be carried by either “Super Servant (1)” or “Super Servant (2)”

Super Servant (1) was hired to others & Super Servant (2) sank. D claim the Contract is frustrated.CA held it is self-induced and no frustrationCA said D can select to breach 1 of the 2 Contracts Self induced

Hard to determine the incident is negligent or accident. (whether self-induced?) eg.whether careless driving.

Pls refer to Definition

Burden of proof1) the one claimed frustration must have the burden of proof & sufficient serious.2) If Self Induced Frustration (SIF) is pleaded it must be proved.

Frustration cannot apply if:1) Reasonably Foresee2) SIF

The doctrine will rarely be applied to leases of land since the view is that whatever happens to the land the tenant still has a legal interest. Nonetheless, frustration is theoretically possible in the most extreme situations

The Cricklewood Property Case ’ National Carries v Panalpina

Was the lease frustrated? Court held NOT frustrated.

2 judge said a lease can never be frustrated2 said frustration may occur in extreme case1 said there is no need to express the view

P was a lease frustrated? NO, but in theory only in extreme cases

Effects of Frustration

Statutory Frustration Contract ActS1(2)

Where a contract is Before

It is against the old common law rule “loss lies where its falls”.

Any money pay before frustration event, cannot be recoverAny money you own can be recover

Knell v HenryBefore the

Chandler v WebsterThe hirer of the room pay the deposit and a further sum is due but not yet handed over. Can get back the extra money.

S1(2)

Provided that, if the party to whom the sums were so paid or payable incurred expenses before the time of discharge in, or for the purpose of , the performance of the contract the court may, if it considers it just to do so having regard to all the circumstances of the case, allow him to retain or, as the case may be, recover the whole or any part of the sums so paid or payablem not being an amount in excess of the expenses so incurred.

1. A pays B ₤1000 in advance. B spends ₤1,500 before frustration.Maximum amount allowable by court? ₤1000

2. A pays B ₤1000 in advance. B spends ₤1,500 before frustration.Maximum amount allowable by court? ₤1000

3. Contract that B to be paid on completion. B spends ₤100Maximum amount allowable by court? ₤0. No money claimable under S.1 (2) unless sums are paid or payable before the frustrating event.

S1(2) Leading Case: (Gamerco Case) Gamerco v ICM (1995) WLR 1226Unsafe stadium

S1(3) Where any party to the contract has, by reason of anything done by any other party therto in, or for the purpose of, the performance of the contract, obtained

(a) the amount of any expenses incurred before the time of discharge by the bendefited aprty inm or tfor the purpose of the perforcenmance of the contract, including nay sums paid or payable by him to any kther paorty in pursuance party under the last foregoing subsection, and

(b) te

Leading Case: Cutter v Powell (1795)A “Just Sum”Appleby v MyersA factory payment “on completion”

B.P. v Hunt