The doctrine of frustration should not be lightly invoked... DIscuss

  The doctrine should be kept within narrow limits as if the courts are to invoke this doctrine on a wider basis, this will lead to needless terminations of several contracts which will not only taint the sanctity of a contract but will also contradict the purpose of the contract.  Despite of its supposed expansion and progression, the courts have always been apprehensive of its consequences on the law of contract and the pacta sunt servanda which should be guarded from any interference or exploitation.

The doctrine of frustration has its limitations which contribute to its narrow and restricted use. According to the courts, frustration will not apply in cases where the supposed frustrating event is found to be foreseeable as found in Davis Contractors Ltd v Fareham Urban District Council and British Movietonews Ltd v London and District Cinemas Ltd. Courts have distinguished that whenever parties are aware of the risks that are allocated through the contract and can foresee them in the future, the doctrine will not be applied in Amalgamated Investment and Property Co Ltd v John Walker & Sons Ltd. However, foreseeability can not always be measured precisely and a situation might arise when the strict rule of foreseeability may be compromised for the limitation of frustration due to its abstract and hypothetical nature.  Therefore, even though foreseeability consolidates the limitation of the doctrine of frustration, it has a potential to compromise it as well which can affect the limits of frustration and possibly force it to be invoked in a wider manner.

It is also vital to understand the case of Lauritzen AS v Wijsmuller BV (The Super Servant Two), in which Bingham expressed the opinion of this discussion. It is clear that the judgement was “a harsh decision open to criticism”. Firstly, frustration was denied in this case as it was held that it was self-induced by the defendants and their election of using the Super Servant Two as the loading vessel for the plaintiffs. Even though, the loss was not due to any breach of contract or negligence from the defendants, they were held liable for it.  As Treitel stated, considering the occurrence of the supervening event and the choice of the defendants, the courts were not being just or fair in their decision. 

Following Bingham and the strict judgement, the purpose of frustration is to discharge the contract completely and it can be argued that the courts need to consider the losses incurred by the parties and the purpose of the contract over the extent of the fault or even the supervening event. At hindsight, it may seem as an unfair judgment but considering the fact pattern of the case, the defendants had to “breach” the contract because of their own doing. However, if self induced frustration was allowed or tolerated, it would be problematic to draw the line between breach and self induced frustration. Not only would it compromise the sanctity of the contract, it would also alter the doctrine of frustration and breach through its ambiguity and uncertainty. Therefore, such restrictions are justified due to these reasons.

The legal maxim of impracticability is also usually rejected by English courts regarding frustration. This is apparent in Davis Contractors Ltd v Fareham Urban District Council. Unlike the United States of America,  It can be argued that if courts were to treat impracticability, the impression might be given that the parties were being “relieved from the ordinary consequences of an imprudent commercial bargain.” The Courts have to be very considerate of this and therefore restrict the doctrine in such a manner.

Due to these obstructions in modern commercial practice, the doctrine of frustration has not been extended, lightly invoked and has been used in narrow limits as courts are simply unable  to apply this doctrine in any other way which has proved to be successful. On the other hand, it is difficult to anticipate what exactly would happen if courts were to treat frustration on a wider angle and extend it as it has not been tested significantly before. Furthermore, it is quite certain that the doctrine of frustration is fairly flawed and irrational to an extent but it is unreasonable to endanger it further by using it on a wider basis which may compromise everything that the courts have achieved over the years regardless of supposed justice or fairness.

        Furthermore, the Law Reform (Frustrated Contracts) Act 1943 has also played a pivotal role in the narrowness of the doctrine. To avoid any further discrepancies and anomalies in the field, the act has dictated how the courts can deal with the problematic monetary issues that arise with the doctrine as found in s1(2), (3). However, despite the unprecedented influence of the act upon the courts, it is fairly clear that the act provides the courts with absolute discretion which suggests that the courts will apply frustration narrowly and not invoke it extensively as they have always done so.

        Force majeure clauses clauses also limit the doctrine of frustration as they are are expressed specifically in contracts which deal with unexpected and disruptive events that may operate to excuse a party from their obligations under a contract. Force majeure clauses act as a deterrent to the doctrine of frustration as it is encouraged by courts to prevent the extensive use of frustration, confining to its narrow state.

To conclude, there is no definitive theory on frustration that can regulate every single contract. Frustration is difficult to apply to the law extensively as it tends to raise more issues that it solves them. This unpredictability and uncertainty is only tested when cases arise and challenge the doctrine,“...a choice between them is a choice of what is most appropriate to the particular contract under consideration”. Frustration is the death of a contract which has life that depends on the obligations of the parties that birthed it. The courts understand this as if frustration is invoked extensively and widely, it would not only compromise everything that has been achieved throughout the times, it would compromise the entity and the purpose of the contract itself. Due to this, frustration should not be lightly invoked, used extensively and should be kept in narrow limits.

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