Frustration

Revision
In order to advise the parties, it is necessary to consider the law in relation to frustration. The
doctrine of frustration provides that where, as a result of events outside the control of the parties,
a contract becomes impossible or at least radically different from what had been agreed, it will
come to an end. All future obligations will cease, and there may be some redistribution between
the parties to take account of money, property or services which have been transferred prior to
the frustrating event. This process is governed by a combination of common law rules and the
provisions of the Law Reform (Frustrated Contracts) Act 1943.

Based on the information given, Banger Bus would argues that the contract to hire the bus can
still be performed. However, from Colins point of view, performance will be pointless as the
reason for hiring the bus no longer exist. Therefore, the non-occurrence of the events will
frustrate the contract (Krell v Henry).
More difficulty arises, however, in relation to the 250 that Colin has already paid, and the fact
that Banger Bus has already service the buses. Banger Bus Co will argue they should keep the
deposit to compensate for the servicing of the buses. However, under the common law, money
paid under a frustrated contract cannot generally be recovered (Chandler v Webster). Thus, It
is unlikely that Banger Bus Co will succeed as they service the buses before each trip making
it unfair for each Colins to pay the cost of someone elses benefit.

The strict approach of the common law is, however, mitigated by the provisions of the Law
Reform (Frustrated Contracts) Act; therefore, it is necessary to consider the remedies available
under the Law Reform Frustrated Contracts Act (1943).

Under S1(2) of the Frustrated Act, all prepaid sums are returnable to the payer once the contract
has been frustrated and any sum already due ceases to be payable, if one party has incurred
expenses the court may allow them to keep all or part of any money paid.

Thus to conclude, Colins claims to 250 is justifiable and fair since no benefits has been
transferred between the parties. Banger Bus Co expenses claim would be at the discretion of
the court under the Frustrated Act.



Supervening illegality (2013 Paper)

In order to advise the parties, it is necessary to consider the law in relation to frustration. The
doctrine of frustration provides that where, as a result of events outside the control of the parties,
a contract becomes impossible or at least radically different from what had been agreed, it will
come to an end. All future obligations will cease, and there may be some redistribution between
the parties to take account of money, property or services which have been transferred prior to
the frustrating event. This process is governed by a combination of common law rules and the
provisions of the Law Reform (Frustrated Contracts) Act 1943.

Neil engaged Adam, an architect to draw the plans for the loft conversion but before he starts
the agreed work new legislation is passed making the type of conversion Neil wants illegal. It
is accepted that supervening illegality would frustrate a contract, Avery v Bowden (1856).

More difficulty arises, however, in relation to the 375 that Neil has already paid, and the fact
that Adam has incurred 100 in preparation prior to the frustrating event, it is therefore
necessary to consider the common law rule in obtaining remedies for the parties. Under the
common law, money paid under a frustrated contract cannot generally be recovered (Chandler
v Webster). The one exception is where there has been a total failure of consideration on the
part of the recipient of the money (Fibrosa v Fairbairn), the courts will allow recovery of what
has been paid. Thus, Neil is entitled to full refund of the deposited amount.

Adam will argue that he has incurred some expenses at the course of preparing for the job, also
there is no indication that the frustrating event is self-induced (Maritime National fish ltd v
Ocean Trawlers ltd), therefore, he should get the full entitlement as agreed by the parties. The
contract having been frustrated, any attempt by Adam to recover the remaining balance would
fail. It is therefore necessary to consider the remedies available under Frustrated Contract
Act.

Under S1(2) of the Frustrated Act, all prepaid sums are returnable to the payer once the contract
has been frustrated and any sum already due ceases to be payable, if one party has incurred
expenses the court may allow them to keep all or part of any money paid. Adams claimed to
reimbursement should be deducted from the 375 deposit, leaving Neil to a refund of 275.
Doing this will be deem fair and just.