Law Of Contract: Discharge Of A Contract: Frustration: Types Of Frustrating Event – Impossibility Of Performance; Supervening Illegality; Change Of Circumstance Making Performance Pointless (Copy)
Frustration
Definition
General Principle
- Frustration occurs where, after formation of the contract, an event occurs without the fault of either party which:
- Makes performance impossible; or
- Makes performance illegal; or
- Makes performance radically different from that originally agreed.
Examination Test
Derived primarily from:
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
Facts
- Building contract became more expensive and took longer than expected due to labour shortages.
Judgment
- Contract not frustrated.
Legal Principle
- Frustration occurs only where performance becomes radically different, not merely more difficult or expensive.
Application
- Leading modern authority defining frustration.
National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675
Legal Principle
- Frustration occurs where a supervening event fundamentally changes contractual obligations.
Application
- Important House of Lords authority.
Type 1: Impossibility of Performance
General Principle
Definition
- Performance becomes physically or legally impossible because of a supervening event.
Examination Application
Most common examples:
- Destruction of subject matter.
- Death.
- Incapacity.
- Unavailability of essential subject matter.
Destruction of Subject Matter
Taylor v Caldwell (1863) 3 B & S 826
Facts
- Music hall hired for concerts.
- Hall destroyed by fire before concerts occurred.
Judgment
- Contract frustrated.
Legal Principle
- Destruction of essential subject matter frustrates the contract.
Importance
- Foundational frustration case.
- Created modern frustration doctrine.
Application
- Leading authority for impossibility.
Appleby v Myers (1867) LR 2 CP 651
Facts
- Contractor agreed to install machinery in a factory.
- Factory destroyed by fire before completion.
Judgment
- Contract frustrated.
Legal Principle
- Destruction of subject matter prevents further performance.
Application
- Important authority following Taylor v Caldwell.
Death or Incapacity
Robinson v Davison (1871) LR 6 Ex 269
Facts
- Pianist contracted to perform.
- Became seriously ill before performance.
Judgment
- Contract frustrated.
Legal Principle
- Personal service contracts may be frustrated by illness or incapacity.
Application
- Leading authority.
Condor v The Baron Knights Ltd [1966] 1 WLR 87
Facts
- Drummer became medically incapable of fulfilling performance schedule.
Judgment
- Contract frustrated.
Legal Principle
- Incapacity preventing performance frustrates personal service contracts.
Application
- Frequently cited.
Unavailability of Essential Subject Matter
Jackson v Union Marine Insurance Co Ltd (1874) LR 10 CP 125
Facts
- Ship grounded before commencing voyage.
- Repairs required several months.
Judgment
- Contract frustrated.
Legal Principle
- Temporary impossibility may frustrate where delay destroys contractual purpose.
Application
- Important authority.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course
Type 2: Supervening Illegality
General Principle
Definition
- A contract becomes illegal after formation because of a change in law or governmental action.
Legal Consequence
- Contract automatically frustrated.
Examination Application
Ask:
- Was the contract lawful when formed?
- Did a later event make performance unlawful?
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32
Facts
- English company contracted to supply machinery to a Polish company.
- World War II broke out.
- Trading with enemy territory became illegal.
Judgment
- Contract frustrated.
Legal Principle
- Supervening illegality frustrates a contract.
Importance
- Leading authority.
Application
- Frequently examined.
Metropolitan Water Board v Dick Kerr & Co Ltd [1918] AC 119
Facts
- Construction contract interrupted by government wartime order.
- Contractor ordered to cease work.
Judgment
- Contract frustrated.
Legal Principle
- Government intervention rendering performance unlawful frustrates the contract.
Application
- Important wartime authority.
Denny, Mott & Dickson Ltd v James B Fraser & Co Ltd [1944] AC 265
Facts
- Timber trading contract affected by wartime regulations.
Judgment
- Contract frustrated.
Legal Principle
- Government restrictions may create supervening illegality.
Application
- Frequently cited.
Avery v Bowden (1855) 5 E & B 714
Facts
- Charterparty existed.
- Before performance occurred, war broke out making performance illegal.
Judgment
- Contract discharged.
Legal Principle
- Illegality may discharge contractual obligations.
Application
- Useful authority.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course
Type 3: Change of Circumstances Making Performance Pointless
General Principle
Definition
- Performance remains physically possible.
- However, the common purpose of the contract disappears.
- Contract becomes radically different from what was originally contemplated.
Examination Application
Known as:
- Frustration of purpose.
- Frustration of common object.
The Coronation Cases
Krell v Henry [1903] 2 KB 740
Facts
- Room hired overlooking coronation procession route.
- Coronation cancelled because of King Edward VII’s illness.
- Viewing procession was the sole purpose of the contract.
Judgment
- Contract frustrated.
Legal Principle
- Contract frustrated where the common purpose disappears.
Importance
- Leading frustration of purpose case.
Application
- Most important authority for this category.
Herne Bay Steamboat Co v Hutton [1903] 2 KB 683
Facts
- Steamship hired to view naval review and cruise around the fleet.
- Naval review cancelled.
- Cruise remained possible.
Judgment
- Contract not frustrated.
Legal Principle
- Frustration does not occur where a substantial part of the contract can still be performed.
Application
- Frequently contrasted with Krell v Henry.
Chandler v Webster [1904] 1 KB 493
Facts
- Room hired for coronation procession.
- Procession cancelled.
Judgment
- Contract treated as frustrated.
Importance
- Early coronation case.
Application
- Historically significant.
National Carriers Ltd v Panalpina [1981] AC 675
Facts
- Warehouse inaccessible due to road closure.
Judgment
- Frustration not established.
Legal Principle
- Mere inconvenience or interruption insufficient.
Application
- Important modern authority.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course
Events That Do NOT Frustrate Contracts
Increased Expense
Davis Contractors Ltd v Fareham UDC [1956]
Facts
- Building work became significantly more expensive and difficult.
Judgment
- No frustration.
Legal Principle
- Increased expense alone is insufficient.
Commercial Hardship
Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93
Facts
- Closure of Suez Canal required longer shipping route.
Judgment
- No frustration.
Legal Principle
- Alternative performance remained possible.
Application
- Mere inconvenience does not frustrate.
Reduced Profitability
The Eugenia [1964] 2 QB 226
Facts
- Ship entered prohibited waters and became trapped.
Judgment
- No frustration.
Legal Principle
- Contract must become radically different, not merely less profitable.
Essential Examination Cases
| Case | Principle | Type of Frustration |
|---|---|---|
| Taylor v Caldwell | Destruction of subject matter | Impossibility |
| Appleby v Myers | Destruction prevents performance | Impossibility |
| Robinson v Davison | Illness frustrates personal service contract | Impossibility |
| Condor v Baron Knights | Incapacity frustrates contract | Impossibility |
| Jackson v Union Marine | Temporary impossibility | Impossibility |
| Fibrosa v Fairbairn | Trading becomes illegal | Supervening Illegality |
| Metropolitan Water Board v Dick Kerr | Government prohibition | Supervening Illegality |
| Denny Mott & Dickson v Fraser | Wartime restrictions | Supervening Illegality |
| Avery v Bowden | War causing illegality | Supervening Illegality |
| Krell v Henry | Common purpose destroyed | Frustration of Purpose |
| Herne Bay Steamboat v Hutton | Purpose partially survives | No Frustration |
| Chandler v Webster | Coronation cancellation | Frustration of Purpose |
| National Carriers v Panalpina | Inconvenience insufficient | No Frustration |
| Davis Contractors v Fareham | Expense not enough | No Frustration |
| Tsakiroglou v Noblee Thorl | Alternative route available | No Frustration |
| The Eugenia | Commercial hardship insufficient | No Frustration |
Essential Legal Test
| Authority | Legal Principle |
|---|---|
| Taylor v Caldwell | Frustration through impossibility |
| Krell v Henry | Frustration through loss of common purpose |
| Fibrosa v Fairbairn | Frustration through supervening illegality |
| Davis Contractors v Fareham | Contract must become radically different |
| National Carriers v Panalpina | Modern definition of frustration |
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total Personal A Grades, 7 Distinctions and 11 World Records For Educate A Change A Level Law Full Scale Course