Saturday, August 06, 2005

Frustrated Contract & Impossibility

Impossibility at time of contract

Actual physical impossibility of performing the contract, whatever means are employed which exist at the time of entering into the contract is, subject to express terms or warranties an excuse for non-performance. But the contractor is liable in damages if he has warranted the possibility of the work or if he has positively and absolutely contracted to do the work.
(Taylor vs Caldwell (1863) 3 B & S 826;Clifford vs Watts (1870) L.R. 5 C.P. 577 at 588; Jones vs St.John’s College, Oxford (1870) L.R. 6 Q.B. 115).

Frustration Generally

Very rarely after the contract has been lawfully entered into and is in course of operation there may arise some intervening event or change of circumstances of so catastrophic or fundamental a nature as to determine the contract prematurely by the operation of the doctrine of frustration.
(Cricklewood Property & Investment trust Ltd. vs. Leighton’s Investment Trust Ltd. (1945) A.C. 221 at 228 H.L.)
The formulation in “Davis Contractors vs Fareham (1956) A.C. 696(H.L.) is now usually regarded as the “classic statement of the doctrine”.
It was there said that frustration: “ occurs wherever the law recognizes that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non heac in foedera veni. It was not this that I promised to do”
(Lord Radcliffe in Davis Contractors Ltd. Vs Fareham U.D.C. (1956) A.C. 696nat 729 (H.L.); Amalgamated Investment Ltd. Vs John Walker Ltd. 91977) 1 W.L.R. 164 (C.A.).

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