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SILAS SALUM
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DISCHARGE BY FRUSTRATION

A frustrating event is an event beyond the control of either party


to a contract that makes the contract impossible - Contract Law
by Elliott and Quinn

In other words it is an event that terminates a contract where


parties lack capacity to influence the outcome. This means that if
two people enter a contract, an occurrence that affects any party
beyond their control is frustration

For example John agrees to let Sarah drive his car while he is
away, for $100. Shortly before the time for Sarah to collect the
car, the car is burnt to ashes, making it impossible for Sarah to
use the car; in this event, the contract is discharged by
frustration.

Frustrating events may occur due to:

impossibility

subsequent illegality

commercial sterility

Impossibility

The contract may be frustrated if the subject matter is destroyed


beyond repair or if it no longer exist; it means that the contract
cannot be performed and it will be unfair to hold parties to their
agreement in such a situation
The case of Taylor v. Caldwell (1863) where Caldwell had
agreed to rent the Surrey Gardens and Music hall to Taylor for a
series of concerts but since the hall burnt down before the day of
the performance. Since Taylor had already made preparations, he
sued but was not granted remedy since the contract was
frustrated.

Subsequent illegality

Based on the maxim: ex turpi causa non oritur actio, the law will
not enforce an illegal contract or a contract that is tainted with
illegality, thus if the law changes after the contract has been
made and perhaps some manners in which the contract should be
carried out are made illegal then the contract is frustrated as the
court will not expect the parties to carry on with an illegal
contract.

In the case of Denny, Mott &Dickson v. James B. Fraser &co.


ltd (1944), an agreement was made for the sale of timber. This
contract was to continue for a number of years, under it the seller
was bound to give the buyer the timber yard and also an option to
buy it but it became illegal to continue with the timber sales. The
House of Lords ruled that the contract was frustrated and should
therefore be discharged.

Commercial Sterility

This simply means that the essence of the contract has been lost.
In a circumstance where even though the contract is not
impossible to perform but the main purpose of it is lost as a result
of an interfering event.

In the case of Krell v. Henry (1903) a contract was made for the
hire of a room with a good view of the coronation of King Edward
for two days. However, when the coronation did not take place
due to the king's illness, the defendant refused to pay, claiming
frustration. His claim was accepted since there was no use of the
room since the purpose of renting the room was lost.

The limitation on the doctrine of frustration:

In order to ensure that the doctrine applies as fairly as possible


the following situations do not count as frustration of contract:

self-induced frustration

more difficult rather than impossible contract terms

foreseeable risk of frustration

provision for frustration in contract

absolute undertaking to perform

Self-induced frustration

If a party causes the event or is within the control of an event that


may frustrate the contract then it is not considered as frustration.

Difficult but possible to perform


The court will not declare a contract frustrated and release the
party from their contractual obligations simply because the
performance of the said obligation is hard or less beneficial to the
party as a result of intervening events.

Provision made in the contract in case of frustration

If the parties have thru thought of the possibility of frustrating


event and takes care of it in their contract then their plea for
frustration will be invalid thus they cannot be released from their
obligations.

Foreseeable risk

If at the time of the frustration of contract the event may cause


frustration is contemplated by the parties, their claim for
frustration in court will be denied as the parties already saw it
coming.

Absolute undertaking to perform

In a situation where the contract states that undertaking of


performance should hold under any circumstance, an event that
may prove frustrating is also one of them. This inevitably binds
the

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