LAWS104 Study Guide - Final Guide: Charter-Party, Economic Equilibrium, State Rail Authority
25 Jun 2018
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DISCHARGE BY FRUSTRATION
David Contractors v Fareham Urban District Council (Lord Radcliffe)
-Radically different test
-‘[F]rustration occurs whenever the law recognises that without default of either party a contractual
obligation has become incapable of being performed because the circumstance sin which performance
is called for would render it a thing radically different from that which was undertaken by the contract’
Frustration
-Parties to a contract may agree that certain events will suspend the contract temporarily, rather than
terminate it
Elements of frustration
National Carriers v Panalpina (Northern) (Lord Simon)
-There must be a supervening event that ‘significantly changes the nature (not merely the expense of
onerousness) of the outstanding contractual rights’
-There must be no fault in either party
-The supervening event must not have been ‘reasonably contemplated by the parties’ at the time of the
contract
-It must be unjust to hold the parties to the original contract
oOh! Media Roadside v Diamond Wheels (Nettle JA)
-‘I take the law to be that a contract is not frustrated unless a supervening event: (a) confounds a
mistaken common assumption that some particular thing or state of affairs essential to the performance
of the contract will continue to exist or be available, neither party undertaking responsibility in that
regard; and (b) in so doing has the effect that, without default of either party, a contractual obligation
becomes 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’
Frustrating events
National Carriers v Panalpina (Northern) (Lord Simon)
-If the event merely makes the contractual obligations more onerous or expensive to perform, it will not
make it a frustrating event
Taskiroglou & Co v Noblee the appellant agreed to sell nuts to the respondent. The normal transit route was
closed by government order and the only other available route was more lengthy and costly. The sellers refused
to complete the contract, arguing that it had frustrated the contract. The court held that there was no frustration
as the journey was longer and the seller’s costs would increase, but performance was still possible
Court order
-It may be that after parties have made an agreement, an order is made by a court that has an impact on
the parties’ ability to carry out the terms
Codelfa Construction v State Rail Authority of New South Wales Codelfa and the State Rail Authority
entered into a major contraction contract, with the price to be paid for the work to be undertaken by Codelfa
based upon them working 24 hours a day, six days a week. There was also a clause in which Codelfa agreed to
complete the works within a specified period of time. However, after complaints were made about noise levels,
the ability of Codelfa to work was restricted. This caused significant disruption and delays in the completion of
work so Codelfa claimed that the contract had been frustrated and as a consequence submitted that it was
entitled to higher remuneration because of the increased costs associated. The High Court held that the contract
had been frustrated as there had been a fundamental or radical change to the circumstances that were
contemplated by the contract
oOh! Media Roadside v Diamond Wheels (Nettle JA) ‘In [that case] it was plain from the evidence of
surrounding circumstances that the parties entered into the construction agreement on the basis of a common
assumption that [Codelfa] would be able to carry out the contract works operating three shifts per day, six days a
week, and could not be restrained by injunction from proceeding in that fashion’
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Document Summary
David contractors v fareham urban district council (lord radcliffe) Parties to a contract may agree that certain events will suspend the contract temporarily, rather than terminate it. There must be a supervening event that significantly changes the nature (not merely the expense of onerousness) of the outstanding contractual rights". There must be no fault in either party. The supervening event must not have been reasonably contemplated by the parties" at the time of the contract. It must be unjust to hold the parties to the original contract ooh! If the event merely makes the contractual obligations more onerous or expensive to perform, it will not make it a frustrating event. Taskiroglou & co v noblee the appellant agreed to sell nuts to the respondent. The normal transit route was closed by government order and the only other available route was more lengthy and costly. The sellers refused to complete the contract, arguing that it had frustrated the contract.
