Deck 22: Frustration: Contracts Discharged for Failure of a Basic Contractual Assumption

Question 1

In which of the following situations is frustration least likely to apply?

A) Performance becomes unexpectedly burdensome or difficult.
B) The risk of the relevant event occurring is allocated to one of the parties in the contract itself.
C) One party foresaw the occurrence of the event at the time of contracting.
D) Both parties foresaw the possibility of the event but failed to state what would happen if the event occurred.

Answer 1

A,B,C

Question 2

'In contracts in which the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance'. This is an absolute rule of law.

Answer 2

False

Question 3

Which of the following are implied conditions whose failure may frustrate a contract? Please select all that apply.

A) Conditions relating to the existence of a person or thing.
B) Conditions relating to the possibility of 'an adventure'.
C) Conditions relating to the occurrence of a particular event.
D) Conditions relating to the continuing life of a third party.

Answer 3

A,B,C,D

Question 4

Why is a contract for the sale of goods which fit a particular description unlikely to be frustrated if the goods are destroyed before ownership passes?

A) Because the Sale of Goods Act 1979, s7 only applies to the sale of specific goods.
B) Because the seller can usually acquire other goods answering to the same description.
C) Because a contract for the sale of goods which fit a particular description is void for uncertainty.
D) Because the buyer is usually taken to have accepted the risk that the goods might be destroyed before ownership passes.

Question 5

The court may look beyond the written contract when considering whether the occurrence of an event constituted a fundamental common assumption, the cancellation of which frustrates the contract.

Question 6

A contract cannot be frustrated if the event in question is caused by one of the parties to the contract, or arises from a breach of contract from of the parties.

Question 7

Which of the following is true regarding the consequences of frustration under the Law Reform (Frustrated Contracts) Act 1943?

A) Parties can recover money paid before the frustrating event (even where there has been performance of a part of the consideration), as well as non-monetary benefits conferred.
B) The contract is invalidated from the start.
C) It is necessary to show that the consideration has totally failed before parties can recover money paid before the frustrating event.
D) The parties can only recover monetary benefits conferred to the other party prior to the frustrating event.

Question 8

Following the passing of the Law Reform (Frustrated Contracts) Act 1943, there is no longer any need to consider recovery of benefits conferred by reference to the common law of unjust enrichment.