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Nick Dowse Frustration – Pg 36 SG

Frustration – Structure of Answer


1. The test for frustration is whether, without the fault of either party,
performance of the contract has been radically different from that
originally contemplated (Codelfa). But there is no frustration just
because performance becomes more onerous, inconvenient or
expensive (The Eugenia)
2. Examples of frustrating events:
a. Destruction of unavailability of the subject matter:
i. Destruction of the subject matter is a well recognised
frustrating event (Taylor v Caldwell)
b. Death or incapacitation of a person essential for performance:
i. Whether sickness renders a contract something radically
different depends on the nature and probable duration of
the sickness and the nature and terms of the contract
(Carmichael v Colonial Sugar)
c. Failure of basis of contract:
i. The event must be the true basis of contract and not
merely coincident (Krell v Henry)
d. Method of performance impossible:
i. Particular method of performance must be stipulated or
contemplated by both parties in circumstances
necessitating that method (Codelfa)
ii. eg when injunction prevents working hours etc
e. Excessive delay:
i. Will depend on the probability of the length of the delay
compared to the time left to run on the contract (Pioneer
Shipping v BTP Tioxide)
ii. Courts tend to a 'wait and see' approach to strikes
because they are usually over before the start (Embiricos
v Sydney Reid)
iii. Events are not judged with hindsight (Court Line v Dant)
f. Illegality:
i. If the law changes or there is a supervening action by the
executive after contract formation (Scanlan's New Neon v
Tooheys)
ii. Dealing with the enemy in times of war (Hirsch v Zinc
Corporation)
g. Land Contracts:
i. Sale contracts:
1. The land must completely disappear or be
resumed by the government (Austin v Sheldon)
ii. Leases:
1. Can hardly ever be frustrated (Panalpina)
2. eg where a premises is leased and road access is
cut off indefinitely.
3. State when the frustration, if any, occurred.
4. Limits of frustration
a. The event must not be provided for in the contract (Claude

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Nick Dowse Frustration – Pg 36 SG

Neon)
b. The event must not have been foreseen by the parties (except
from the case of illegality) (Codelfa)
i. It must have been a serious possibility (Codelfa)
c. The event must not be due to the fault of one of the parties
(Maritime National Fish)
i. The onus lies on the party asserting the fault (Joseph
Constantine)
5. Effect of the frustration
a. The effect of frustration is that the contract is automatically
discharged as to the future – it terminates further performance of
the contract, and the loss lies where it falls (Hirji Mulji).
Unconditionally acquired rights and liabilities are not discharged
but conditionally acquired rights are liabilities and all future rights
and liabilities are discharged.
b. Work out what they are entitled to up until the frustration.
6. State that any work carried on after the frustration will need to be
recovered on a quantum meruit basis.

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