Commercial Laws

Topics: Contract, Contract law, Breach of contract Pages: 3 (447 words) Published: February 15, 2013
al  Frustrated contracts
A contract may be discharged by frustration. A contract may be frustrated where there exists a change in circumstances, after the contract was made, which is not the fault of either of the parties, which renders the contract either impossible to perform or deprives the contract of its commercial purpose. Where a contract is found to be frustrated, each party is discharged from future obligations under the contract and neither party may sue for breach. The allocation of loss is decided by the Law Reform (Frustrated Contracts) Act 1943.  

Examples of frustrating events
Destruction of the subject matter:

Taylor v Caldwell 3 B & S 826         
Personal incapacity will generally render the contract frustrated:  
Condor v Baron Knights [1966] 1 WLR 87     
Where the contract becomes illegal to perform it will frustrate the contract:  
Fibrosa Spolka v Fairbairn [1943] AC  
Where a contract can not be performed in the specified manner:  
Nicholl and Knight v Ashton, Eldridge & Co [1901] 2 KB    
A contract may also be frustrated where it is deprived of its commercial purpose:  
Krell v Henry [1903] 2 KB  
However, the contract must be deprived of the whole commercial purpose to amount to frustration:  
Herne Bay Steam Boat v Hutton [1903] 2 KB  
No frustration
A contract will not be frustrated where:
1. It is more difficult or expensive to perform
2. Impossibility of performance is the fault of either of the parties 3. Where there is a force majeure clause
4. Where the frustrating event could be foreseen
1. A contract will not be frustrated merely because it becomes more difficult or expensive to perform:  
Davis Contractors v Fareham UDC [1956] AC
Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93           

Discharge by breach 
A contract may, in some circumstances, be discharged by a breach of contract. Where there exists a breach of...
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