Audio recording 24.1

Audio recording 24.1 transcript

Frustration is quite closely linked to mistake, because whether or not you're looking at frustration or mistake might depend solely upon when an event happens. So, let's say that I enter into a contract with you to hire your flat so that I can get a view over the coronation procession and the coronation is cancelled. And if the coronation is cancelled a second before we enter into the contract, then we're looking at the doctrine of mistake, which was dealt with in the last chapter. Whereas if the coronation is cancelled a second after we signed the contract, then we're looking at frustration, which is the focus of this chapter. And again, it's not easy to say exactly what the basis of the law of frustration is, similar to mistake. So, most cases at the moment think that frustration is as a result of the rule of law. That where a subsequent event occurs, an event subsequent to entering into the contract, and that event makes performance something which is radically different from that which was undertaken by the contract, the contracts would be frustrated. But I think it's also possible to adopt the same implied term analysis for frustration as was adopted in the last chapter for mistake, for largely the same reasons. But again, it won't tend to lead to different outcomes, just different reasoning. And a key thing to note about frustration is it is a very, very narrow doctrine. It very rarely succeeds, very rarely are commercial contracts frustrated. And I think that there were two main reasons for that. The first is that the law of frustration itself is very narrow. So, if it's just that the contract has become more expensive to perform, then that won't be enough for frustration. So, I think that there's going to be quite a lot of cases in the relatively near future which raise points about frustration because of Brexit and the COVID-19 pandemic. But if the contract is just become more difficult to perform, it's very unlikely that those contracts will be frustrated. You need something which makes the contract radically different, or impossible to perform really. But just as important are the narrow walls of frustration themselves. I think it’s the fact that the terms of the contract themselves might narrow the scope of frustration. And so, you have to look at the express terms of the contract. And in particular, many commercial contracts will now include force majeure clauses, or hardship clauses, which will say what should happen in the event of a pandemic, a flood, a volcano erupting, or whatever it might be. So commercial parties might not leave it to the general law of frustration, but try to deal with the possibility of certain events occurring in the contract itself. And because force majeure and hardship clauses are so common, it may well be that a deliberate choice not to include such a clause could be just as revealing. And that's more or less what happened in Canary Wharf v European Medicines Agency, a case which argued that a contract, a lease for a building in London was frustrated as a result of Brexit. And the argument that the lease there is frustrated was rejected, I think likely by the judge, because courts should not rescue a party from what turns out to be a bad bargain through broadening the scope of frustration. So, bear in mind that frustration is a very narrow doctrine.