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The Legal Principle of Frustration has been limited by the Courts. Explain why and how this has been done

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Introduction

Mark Lam JianHao Saturday, 12 March 2011 The Legal Principle of Frustration has been limited by the Courts. Explain why and how this has been done. Frustration is an event that occurs beyond the control of any parties in a contract that prevents either of the parties from performing their part in fulfilling the contract. However, this is a recent development as common law states that a party was bound to perform their obligations under contract regardless of intervening events and would override any circumstances as in the case of Paradine v Jane in 1647 where Jane had to pay rent even after being forced off the land due to an invasion. The doctrine was developed as a response for a party to discharge the contract due to unforeseeable situations that interrupt the contract. The result is that both parties would be relieved of the burden of performing and the liability for not performing. There are three main types of frustrating events; the first Impossibility is where the event makes performance impossible. ...read more.

Middle

Limitations would be where the event is not beyond the control of either party but rather a party chose to act so as to frustrate the contract, the courts will not treat the contract as discharged as in The Superservant Two in 1990 where one of the two barges sunk and the other was already occupied in another contract, it was held that it was not frustrated as the defendants had the other barge available but chose not to give it to the claimant. Another limitation would be where the event merely makes the contract harder to be performed and not unable to be performed as in Davis Contractors Ltd. v Fareham UDC in 1956 where due to events, the estate that would be built at a fixed price could only be done at a loss. Also should the frustrating event been foreseen or in contemplation of the parties as in Amalgamated Investment and Property Co. v John Walker and Sons Ltd. ...read more.

Conclusion

Furthermore, there is a Law Reform Act regarding Frustrated Contracts in 1943 to deal with the consequences of frustrating events covering three main areas, the recovery of money paid before the event, the recovery of work already completed and finical reward where a valuable benefit has been conferred. Section 1(2) gives the court discretions to provide some compensation for work under a contract but it is what the court deems fair and may not cover the expenses. Section 1(2) further confirms that money paid in advance is recoverable and that money due need not be paid. Lastly Section 1(3) allows a party that conferred a valuable benefit to the other party some form of payment as in BP Exploration Co. (Libya) Ltd v Hunt; again this is up to the courts discretion. In conclusion, it seems that the although now people have a way to be discharged from continuing a contract, the court has the power to set the limit regarding how much compensation they can claim and this may not even cover the expense. It also shows how narrow the doctrine is as in the case of Superservant Two. ...read more.

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