Frustration — common mistakes

In a problem question, always check for limitations first. Before concluding a contract is frustrated, ask: Was the event the fault of one party? Was it foreseeable? Does the contract just become more expensive? Is there a force majeure clause? Addressing these limitations demonstrates a higher-level understanding.

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.

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.

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.