Frustration
One of the most significant principles of the Law of Contract is that of the capacity of the parties to enter into the contractual agreement freely. Therefore, freedom of contract lies at the core of the contractual agreements. Once a valid contract has been entered into, each party is expected to undertake their obligations without fail. However, the doctrine of frustration sometimes intervenes in a manner that undermines the principle that parties ought to keep their agreements. This paper discusses the assertion that the doctrine of frustration challenges the validity of the fundamental principle of pacta sunt servanda, meaning “agreements must be kept”.
A contract is an agreement between two or more parties which create particular obligations that are enforceable or otherwise recognizable at law. Essentially, a contract is a legally enforceable agreement. This doctrine is known as pacta sunt servanda which embodies the rule that agreements and stipulations, especially those which are contained in treaties, have to be observed strictly. The rule at common law was that whenever parties had validly contracted, the law could not recognize anything as permitting either of the parties to go back on their word. Article 8(1) of the Contract Law states that a lawfully accepted contract is binding on the parties who shall each fulfill its own obligations in accordance with the terms of the contract, and the contract cannot be unilaterally altered or end. The parties were expected to provide for the likelihood of the occurrence of all eventualities so that if they failed to do so, then the loss had to be borne by the liable party who then had to bear the consequences as was held in Paradine v Jane.
Therefore, the common law construed the obligations of parties to a contract strictly. As a result, the failure of a party to the contract to meet their obligations automatically made that party liable for breach of the contract to the innocent party. It was immaterial that
A contract is an agreement between two or more parties which create particular obligations that are enforceable or otherwise recognizable at law. Essentially, a contract is a legally enforceable agreement. This doctrine is known as pacta sunt servanda which embodies the rule that agreements and stipulations, especially those which are contained in treaties, have to be observed strictly. The rule at common law was that whenever parties had validly contracted, the law could not recognize anything as permitting either of the parties to go back on their word. Article 8(1) of the Contract Law states that a lawfully accepted contract is binding on the parties who shall each fulfill its own obligations in accordance with the terms of the contract, and the contract cannot be unilaterally altered or end. The parties were expected to provide for the likelihood of the occurrence of all eventualities so that if they failed to do so, then the loss had to be borne by the liable party who then had to bear the consequences as was held in Paradine v Jane.
Therefore, the common law construed the obligations of parties to a contract strictly. As a result, the failure of a party to the contract to meet their obligations automatically made that party liable for breach of the contract to the innocent party. It was immaterial that
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