Self-test questions: Frustration

. Which one of the following statements is not consistent with the decision of the House of Lords in Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696?

The doctrine of frustration was based on an implied term of the contract that the parties should be excused if and when a supervening event materialised.

In general, impracticability was not a valid ground for discharge of contract by frustration.

Frustration did not necessarily mean that contract performance was impossible; a supervening event that rendered it radically different from the agreed performance would also frustrate the contract.

Frustration depended upon whether, according to the true construction of the terms of the contract, the supervening event had a sufficiently serious effect upon the agreed performance.

Hardship, inconvenience, or material loss alone are not enough for the doctrine of frustration to operate.

. In relation to the decision of Marcus Smith J in Canary Wharf (BP4) T1 Ltd v European Medicines Agency [2019] EWHC 335 (Ch), which one of the following is not true?

The court endorsed the 'multi-factorial approach' as correctly stating the relevant law.

The court concluded that the contract in question would not be frustrated by the UK's withdrawal from the European Union.

The court held that performance of the contract had not become frustrated by supervening illegality.

The court endorsed the implied term or implied condition theory as explaining the juridical basis of the doctrine of frustration and applied this to the facts.

The court held that the contract had not become frustrated by a failure of the common purpose.

. Neymari, a singer, contracts a serious illness and is unable to fulfil a performance contract at the fixed date for a performance at Marex Music Store. Which one of the following most accurately summarises the parties' legal position?

The contract is probably frustrated on the ground of the unavailability of subject matter.

The contract is voidable.

The contract is void, subject to a claim under s. 1(2) of the Law Reform (Frustrated Contracts) Act 1943.

The contract is probably frustrated on the ground of the unavailability of the agreed means of performance.

Any alleged frustration is 'self-induced' and so the frustration doctrine will not apply.

. A fund entered into a contract to finance the operation of a casino but, subsequently, a Money Laundering Act banned that type of contract. Which one of the following most accurately summarises the parties' legal position?

The contract is probably frustrated and the Law Reform (Frustrated Contracts) Act 1943 does not apply because the contract, being a contract relating to gambling, is an 'excluded contract' as defined within that Act.

The contract is probably frustrated on the ground of illegality.

The contract is probably void on the ground of illegality.

The contract is probably frustrated on the ground of unavailability of the subject matter.

The contract is probably not frustrated because the narrow doctrine of frustration is unlikely to apply to a commercial contract of this type.

. Andy is unable to fulfil a contract for sale of goods with Canary Ltd because one of Andy's suppliers' factories has been burned down by accidental fire. Which one of the following most accurately summarises the parties' legal position?

The contract between Andy and Canary Ltd is probably frustrated because of the impracticability of performance.

The contract between Andy and Canary Ltd is probably frustrated by the physical destruction of the subject matter.

The contract between Andy and Canary Ltd is probably frustrated because the method of performance has become impossible.

The contract between Andy and Canary Ltd is probably frustrated on the basis of the frustration of the purpose of the contract.

The contract between Andy and Canary Ltd is probably not frustrated as the risk of a failure to source supplies is with Andy.

. Amal wins a prize, giving her free entry to the next England v France rugby international, and decides to travel to London by coach to watch the match. She purchases a day return coach ticket from Bruno Ltd. Unfortunately, the rugby match is cancelled owing to a freak storm. Amal no longer needs her coach ticket and therefore claims that her contract with Bruno Ltd has been frustrated. Which one of the following statements most accurately summarises the legal position between Amal and Bruno Ltd?

The contract has been frustrated on the ground of impossibility because there is no rugby match for Amal to attend.

The contract has been frustrated because Amal's sole purpose of entering the contract, which is to watch the rugby match, has been destroyed.

The contract has not been frustrated because the rugby match does not form the common purpose of the parties.

The contract has not been frustrated because Amal will gain a valuable benefit from travelling to London.

The contract has been frustrated on the ground of the destruction of the subject matter.

. Nav purchases an 'all-in-one travel and seating package' from Mega Events Ltd to view the next England v Italy rugby international match. This entitles Nav to a day return coach ticket to London and a seat for the match. Unfortunately, the rugby match is cancelled owing to a freak storm. Nav claims that his contract with Mega Events Ltd has been frustrated. Which one of the following statements is most likely to be followed by a court in determining the legal position between Nav and Mega Events Ltd?

The contract has been frustrated because the common purpose of both parties has been destroyed.

The contract has been frustrated on the ground of common mistake.

The contract has not been frustrated because the rugby match does not form the common purpose of both parties.

The contract has not been frustrated because at least one of the purposes of the contract, namely travelling to London, is unaffected by the cancellation of the match.

Unless the contract expressly provided otherwise, Nav will have assumed the risk of the cancellation and so the contract has not been frustrated.

. Jim agrees to make a new kitchen table and six chairs for Liv, at a cost of £2,000 payable on completion. Jim purchases the materials for £500 and soon completes the table, which he delivers to Liv. At this point, Jim's workshop is completely destroyed and he is severely injured. Jim is now physically incapable of performing his contract with Liv. It is agreed that the contract has been frustrated. Which one of the following statements most accurately summarises the rights that Jim possesses under the Law Reform (Frustrated Contracts) Act 1943?

Jim can claim his expenses of £500, subject to the court's discretion, and a reasonable sum of money representing the value of the table received by Liv.

Jim can claim his expenses of £500, subject to the court's discretion, but he cannot claim any money for the table received by Liv.

Jim cannot claim his expenses of £500, nor any money for the table received by Liv.

Jim can elect to claim either his expenses of £500 or a reasonable sum of money representing the value of the table received by Liv and a court will award whichever is the higher amount of the two.

Jim cannot claim his expenses of £500, but he can claim a reasonable sum of money representing the value of the table received by Liv.

. Which one of the following statements concerning the Law Reform (Frustrated Contracts) Act 1943 is not true?

The 1943 Act does not apply where the parties have made express provision for the consequences of frustration.

The party who has made prepayment pursuant to the contract before the frustrating event occurs must demonstrate a total failure of consideration in order to recover the money under s. 1(2).

The court's discretion to award expenses under s. 1(2) has upper limits, but no lower limit, because the court may order the recipient of an advance payment to repay the full amount, even if it has incurred expenses.

Section 1(3) applies only to cases where a 'valuable benefit' has been conferred upon the other party. If the service does not yield any end product, there is no 'valuable benefit' so no award.

In considering the recoverability of a just sum under s. 1(3), a court must consider the effect of the frustrating event on the benefit received.

. Kansah booked a room at Poonam's hotel for the weekend of 12 May, agreeing to pay a 10 per cent deposit immediately. They agreed that the deposit would be forfeited only should Kansah cancel the booking without good reason. On the weekend in question, Poonam ensures that there is clean linen, toiletries, and a well-stocked mini-bar available in the room allocated to Kansah. Unfortunately, owing to floods, all roads to the hotel are impassable. Kansah and Poonam agree that the booking contract has been frustrated, but both are now disputing the question whether the 10 per cent deposit is repayable or not. Which one of the following statements is probably true?

Kansah is automatically entitled to the return of her deposit.

The court may allow Poonam to retain a sum of money representing the expenses incurred for preparing the room, before returning the remainder of the deposit to Kansah.

Kansah has automatically forfeited her deposit.

Poonam has a right to deduct any of her expenses for preparing the room, before returning the remainder of the deposit to Kansah.

Poonam will only be allowed to retain a sum of money representing any expenses incurred if the contract expressly so provides.

. Benji enters into two similar contracts with Ikrah and Dale to import certain machinery. The importation of the machinery requires a licence from the government of Benji's country. In the contract with Ikrah, Benji guarantees to obtain a licence, whilst no such guarantee is given in the contract with Dale. Benji applies for two licences for the importation of the machinery, but only one licence is granted. Benji allocates the licence to the contract with Ikrah and claims that the contract with Dale is frustrated. Which one of the following statements most accurately summarises the legal position between Benji and Dale?

The contract has not been frustrated, because the unavailability of the licence is not due to any breach of contract by Benji.

The contract has been frustrated, because the allocation by Benji of the only licence to the other contract aims to avoid a breach of that contract by Benji and is thus reasonable.

The contract has not been frustrated, because the unavailability of licence is due to Benji's allocation of the only licence to the other contract.

The contract has been frustrated, because the contract has not expressly allocated the risk of failure to obtain the licence to Benji.

The contract has been frustrated on the ground of impracticality of performance.

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