Doctrine of Frustration

In some cases, a contract become unenforceable, impossible to perform, illegal or futile due to unexpected or unforeseen event that happened after the contract was made. This is known as a frustration. Frustration is an act outside the contract that makes it completion impossible, a good example of this is in marine contracts where a delivery is specified for a certain date and time but the crossing is so bad that the delivery cannot be made on time. This would be an example of frustration of that part of the contract and no breach would be held as long as the goods were delivered at the nearest possible time. Frustration of a contract and what it constitutes is usually seen via exclusion clauses, such as advising that liability will not be held for incomplete contracts or damage due to acts of God, nature etc. Other examples of what may frustrate a particular contract may also be present also, i.e. unforeseen acts, third parties etc.

The following are circumstances where contract can be ended by frustration:

• change in law or operation of law

In Avery v Bowden (1855), a good example of frustration followed by illegality. The outbreak of the Crimean war caused the agreement to charter a ship in the contract turned illegal, thus discharging the contract. On the other hand, the case Baily v. De Crespigny (1869), the defendant leased a land to the claimant and the adjoining land which he retained will not be built upon. Then, a railway company, which was to build a railway, compulsorily acquired the defendant’s land under a statute which was enacted after the contract was made. It was upheld in court that the defendant was dischaged of his obligation or promise to build upon the portion of land he owns that he retained from the lease to the claimant. Should the statute been enacted before the contract was made, the outcome of the case would’ve been in favour of the claimant.

• Destruction of thing essential for performance usually refer to the case of Taylor v. Caldwell (1863). In the case, the claimant had hired a hall for a series of concert for four named days. However before the concert could debut, the hall was accidentally burnt down. The claimant sued for damages for the expenses he incurred in advertising of the concerts but the court held that the contract was frustrated by the incident.

• Non-occurance of event which the contract depends will also frustrates a contract. Coronation cases are good example to illustrate this factor. In the case of Krell v. Henry (1903), the defendant hired a room to spectate the coronation of Edward VII but procession was postponed due to the King’s illness. The defendant had then refused to pay the rent as the purpose of renting the room in the first place is to watch the coronation procession. It was upheld in court that the cancellation of the procession had frustrated the contract.

In another case, the case of Herne Bay Steamboat Co. v. Hutton (1903) , that was also during the same coronation event of King Edward VII, the claimant was the boat operator and the defendant had hired that boat to take passenger from Herne Bay to see the naval review at Spithead. It was also for a cruise around the fleet. The coronation was cancelled but the cruise around the fleet could still have taken place. The court held that the defendant who did not use the boat, must pay the hiring fee as the cancellation did not frustrate or discharge the contract.

• Contract may be discharged when fundamental duties of the contract had changed apart from what was the intention or purpose the contract was set out for in the first place. Example can be found in the case of Metropolitan Water Board v. Dick, Kerr & Co (1918) where under the wartime powers, the Minister of Munition ordered the defendant to stop building and sell off the plant which they went into contract with the claimant to build a water reservoir. The uncertain duration of the interruption of war undermined the agreement as the commercial purpose of the contract is frustrated. However, a contract may not be frustrated just because it had become harder to perform the contractual obligation. In the case of Tsakiroglou & Co. Ltd v. Noblee Thorl (1962), the defendant did not ship the groundnuts which they were supposed to ship from Sudan to Hamburg, Germany via Suez Canal because the canal was closed. The court held that the canal is not the only way to Hamburg and that the defendant can ship the groundnuts via Cape of Good Hope, S. Africa although this will increase the shipping expenses. As such the contract cannot be frustrated just because it had become more difficult to perform the duties. If the only route is blocked, then the cantract can be frustrated.

• Where a person is required to render personal services, personal incapacity and or death will discharge the contract. This was held in the case of Condor v. The Barron Knights (1966) where the claimant who was employed as the drummer of the band, was certified by his doctor that he can play on no more than four nights a week while in contract he was supposed to play seven nights a week when necessary. Following this, the band terminated his contract. Court held that his illness had frustrated the agreement and his contract was thus, properly terminated.