End-of-chapter questions: Answer Guidance 24.2

Frustration: contracts discharged for failure of a basic contractual assumption

You should consider each contract Ray enters into separately and in turn. First, there is the contract with Reuben Hotel. Has this been frustrated by the cancellation of the event? Do you think this is more like Krell v Henry [1903] 2 KB 740 or Herne Bay Steam Boat Co v Hutton [1903] 2 KB 683 (perhaps discussing the cab man example too). Perhaps this will depend on the interpretation of the contract (was it solely for the purpose of this particular match?) and assumes that there is no hardship or force majeure clause that would cover what has happened.

It is also difficult to decide whether Ray’s contract with Nigel has been frustrated. Perhaps on a true interpretation of the contract Ray bears the risk of producing both players and is himself in breach. If so, Nigel might sue for damages (including loss of a chance to win the further £10,000—see Chapter 26). If not, and the contract is frustrated, then you should apply section 1(2) of the 1943 Act as regards the money paid. Perhaps it is reasonable for Nigel to keep the £5000 paid in advance as he might have spent money already on training, preparation and so on (Gamerco SA v ICM/Fair Warning (Agency) Ltd [1995] 1 WLR 1226).

Ray might sue Garry for breach of contract in failing to attend, and seek to recover all his losses. But Garry might argue that he is not in breach but instead the contract has been frustrated. This might raise a difficult question about whether Garry is at fault, which is difficult to determine (his conviction might have been for peaceful or violent demonstrations, for example). Perhaps cases such as J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd’s Rep 1 could be discussed by analogy here.