Frustration of contracts

This lecture presentation is in three sections:

1. The origin and development of the doctrine of frustration.

2. The factors which determine whether a contract should be treated as frustrated.

The main factor here is whether the change in circumstances has had (or will have) a sufficiently fundamental effect on the ability of the parties to perform the contract.

The discussion begins by looking at the operation of the doctrine of frustration in the classic situation where the effect of the change in circumstances is to make the very thing contracted for impossible, whether through destruction, illness of a person or illegality / state intervention.

We then turn to consider different variations to the simple, classic situation and see how these might affect the operation of the doctrine of frustration:

  • where only the means by which the parties expected to carry out the contract has been affected
  • where only the ulterior purpose of the contract (the intended benefit) is affected
  • where the effect has been only to delay / interrupt the performance of the contract
  • where the effect has been only to make performance more inconvenient / expensive

We then look at other factors, beginning with the effect of an express provision in the contract covering what should happen in the changed circumstances. Then at where the change in circumstances, if not covered by an express provision, was, at least, foreseeable. And then at ‘self-induced’ frustration (i.e. where the change in circumstances or its effect was the fault of one of the parties).

3. Finally, we consider the consequences of frustration.

In particular, what happens about losses already suffered or benefits already received.
First, the rules at common law and their deficiencies.
Then the Law Reform (Frustrated Contracts) Act 1943, and to what extent this has improved the parties’ positions.

Lecturer: Gianni Vuolo

Duration: 68 mins (approx)

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