Question 1

If my supplier's costs double because of a war, is my contract with them frustrated?

Accepted Answer

It is highly unlikely. The courts have consistently held that a contract becoming more difficult or expensive to perform does not amount to frustration. The case of *Davis Contractors Ltd v Fareham UDC* established that a 'bad bargain' is not a reason to escape a contract. The performance must be radically different from what was agreed, not just less profitable for one party.

Question 2

What's the difference between frustration and a 'force majeure' clause?

Accepted Answer

Frustration is a common law doctrine that automatically terminates a contract when a supervening event makes performance impossible or radically different. A 'force majeure' clause is an express term written into the contract by the parties themselves. It specifies certain events (e.g., war, pandemic, natural disaster) and dictates the consequences, such as suspension of duties or termination. If a valid force majeure clause covers the event, the clause will apply instead of the doctrine of frustration.

Question 3

Does the Law Reform (Frustrated Contracts) Act 1943 apply to all frustrated contracts?

Accepted Answer

No, there are important exceptions listed in s.2(5) of the Act. It does not apply to certain types of contracts, most notably charterparties (except time charters), contracts for the carriage of goods by sea, and contracts of insurance. It also does not apply where the parties have made their own valid provision for the consequences of frustration within the contract itself.

Frustration

What you need to know

Frustration