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What are the rules governing the doctrine of frustration in the law of contract? Evaluate it's usefulness.
The first 200 words of this essay...
Paper 1, June 2000, Question 5
a) What are the rules governing the doctrine of frustration in the law of contract? (15m)
b) Evaluate the usefulness of this doctrine. (10m)
a) The term "frustration of a contract" defines the unexpected termination of a contract as a result of an event that either renders the performance impossible or illegal, or prevents its main purpose from being achieved. For a contract to be frustrated, there must first be a contract between the parties. The frustration must be beyond the control of the contracting parties, and the event must bring the contract to an end. The frustrating event must also occur after the formation of the contract.
In Paradine v. Jane, the court adhered to the theory of 'absolute contracts', and it was said that if the parties wanted to avoid liability, then they will have to state this in the contract. Later, in Taylor v. Caldwell, it was said that a contract can be discharged if the contract became impossible to perform, due to some external cause that neither party was responsible for.
The modern test was enunciated by Lord Simon in National
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