Frustration of a Contract

Frustration of a contract occurs where performance of the contract becomes impossible due to events that are beyond the parties control.

A contract is frustrated when a supervening event that is unforseen by the parties (and of course not their fault) makes performance of the contract impossible or very different from how it was originally agreed (see case of Davis Contractors v Fareham Urban DC [1956] AC 696). By way of example say the fridge you ordered from ‘Comrrys’ (a leading electrical retailer) was going to take 6 years to be delivered instead of the 3 days originally envisaged, clearly this is very different.

If the contract is frustrated the Law Reform (Frustrated Contracts) Act 1943 will come into play. The buyer will be able to recover any payments made before the frustration (s1(2)) and any sums due will cease to be payable. Interestingly the court can order that the seller be allowed to keep some or all of the payments already made if it considers this to be just. This is more likely to be relevant in a contract for the supply of services where for example the services have been partly completed and the frustrating event has prevented the work being completed.

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