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Contract: Discharge of Contract

Limits on frustration and the Law Reform (Frustrated Contracts) Act 1943

  • 3 things to know
  • Components 2 and 3

Overview

Self-induced frustration, effect of a force majeure clause and common law position on money paid before frustration.

What you need to know

Answer each one before you reveal it.

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Key term

What is self-induced frustration?

Numbers

Which case illustrates self-induced frustration?

Key term

Can a foreseen event frustrate a contract?

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    What is self-induced frustration?

    Model answer

    Self-induced frustration occurs where the event results from a party's own choice or default. A party cannot rely on frustration it brought about itself.

  2. 2

    Which case illustrates self-induced frustration?

    Model answer

    Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] concerned a charterer with five trawlers and only three licences. The decision to allocate the licences elsewhere was a choice, so frustration could not be claimed.

  3. 3

    Can a foreseen event frustrate a contract?

    Model answer

    An event the parties foresaw will not normally frustrate the contract. The parties are taken to have accepted the risk of an event they could see coming.

  4. 4

    Which case involved a foreseeable risk to a property purchase?

    Model answer

    Amalgamated Investment and Property Co v John Walker & Sons [1977] concerned a building listed after contracts were exchanged. Listing was a recognised risk in property dealing, so the contract stood.

  5. 5

    What is the effect of a force majeure clause?

    Model answer

    A force majeure clause states what happens if named events prevent performance. Frustration is displaced where the contract itself provides for the event.

  6. 6

    Can a contract be frustrated where performance is merely more onerous?

    Model answer

    A contract is not frustrated merely because performance has become more onerous or expensive. The bargain must become something radically different.

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