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Doctrine Of Frustration Notes

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Doctrine of Frustration Has the change of circumstances make performance radically different from that which was originally undertaken?

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Davis Contractors v Fareham UDC [1956]: o Lord Radcliffe:
? Courts first examine contracts and the circumstances in which they were made

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In order to see whether or not from the nature of the parties must have made their bargain on the footing that a particular thing or state of things would continue to exist. o If they must have done so, a term will thereby be implied that this is the case.
? Court will then ask whether or not literal enforcement of obligations in new circumstances

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Will lead to radically different performance than that originally promised o owing to this non-existence of the thing contemplated at formation that it would continue to exist. What makes performance radically different?

1. Legal impossibility

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Metropolitan Water Board v Dick Kerr [1918]: M contracted with D to build dam. Subsequently while work taking place, D banned from continuing work by Ministry of War. o Lord Atkinson:
? Parties can be excused when conditions anticipated at contract formation have completely changed since then,

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making performance entirely different (i.e. b/c illegal).

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Or if contract continued, they would be bound for indeterminate length of time.

2. Physical impossibility

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Death and Serious Incapacity in personal service contracts

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Destruction of Subject Matter o Taylor v Caldwell [1863]: Music hall hired for concerts by D, subsequently destroyed accidently be fire before concerts performed.
? Blackburn J:

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Where parties knew something had to exist in order for the contract to be performed at contract formation o But subsequently that thing disappeared without their fault
? Parties have implied condition that they intend to be excused if performance thereby becomes impossible.

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Failure of Supplies o S.7 Sale of Goods Act:
? Where agreement to sell specific goods

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Without any fault of seller or buyer o Goods perish before risk transferred to buyer o Contract is avoided

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o But where goods are unascertained, then risk will normally be on the seller to find alternative supplier, meaning contracts here rarely frustrated. Delay and Hardship of finding substitute o Must be caused by new and unforeseen event, however, not just within commercial risks undertaken
? Davis Contractors v Fareham [1965]:

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Lord Radcliffe: o Lack of Provision for shortages/delays within contract which are foreseeable in the trade do not make contract radically different.
? Can't just use frustration to get out of bad bargain. o Performance in new circumstances must radically alter the rights and obligations originally undertaken (question of degree)
? Jackson v Marine Insurance Co Ltd [1879]: Ship meant to end up in San Francisco w/ cargo, ran aground and was delayed for several months. Z pulled out of charterparty, C could only claim insurance from D if contract frustrated, not for breach.

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Bramwell B: o Although trip agreed could be made eventually, time gap between two trips indicated that latter trip was a new adventure
? a voyage which Z and C had no intention of making when the contract was made

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Thus, contract frustrated by delay leading to new obligations.
? The Eugenia: D, if hadn't broken war clause by entering Suez Canal, would have had to take ship round Cape of Good Hope rather than through canal, leading to 30 day longer journey.

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Lord Denning MR: o Goods carried not needed at market place at exact time - could be delayed w/ little effect to price o Delay of 30 days capable of being performed by ship, and not unreasonable delay.
? Therefore, performance different and longer, but not radically different from that originally agreed.

3. Purposeless

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Contract, while not impossible to perform or leading to unreasonable hardship o can still be frustrated when the intervening event has so undermined the purpose of the contract
? that it should be discharged

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Krell v Henry [1903]: Rooms advertised as having view of coronation procession hired out to D, but procession cancelled before contract performance. o Vaughan Williams LJ:
? First must ask: What is the substance of the contract?

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If substantial contract needs for its foundation the assumption of the existence of a particular state of things. o Then contract is limited to performance if that state of things exists.

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