Civil Engineering Reference
In-Depth Information
contract has been frustrated, the contract must be viewed as a whole. The question to
be considered is whether the purpose of the contract, as gathered from its terms, has
been defeated, see
James B Fraser & Co. Ltd
v.
Denny, Mott & Dickson Ltd
(1944). It
follows that if parties had regard to the possibility of a particular event and made pro-
vision for it in their contract, the occurrence of such an event cannot have the effect of
frustrating the contract, see
Cricklewood Property & Investment Trust Ltd
v.
Leighton's
Investments Trust Ltd
(1945). If the contract does not contemplate the intervening
circumstances, it will be frustrated. The intervening circumstances must, however,
be thoroughly investigated before it can be concluded that the contract has been frus-
tratedwhere,thoughnotcontemplatedbythecontract,thecircumstancesstillallowed
for aspects of the contract to continue, see
IslamicRepublicofIranShippingLines
v.
Steamship Mutual Underwriting Association (Bermuda) Ltd
(2010).
Whether or not a contract has been frustrated will, in each case, be a question of
fact to be decided upon the true construction of the terms of the contract, read in
the light of the nature of the contract and of the relevant surrounding circumstances
when the contract was made, see
Head Wrightson Aluminium Ltd
v.
Aberdeen Harbour
Commissioners
(1958).
The propositions relevant to the doctrine of frustration were set out by Lord Justice
Bingham (as he then was) in
J Lauritzen AS
v.
Wijsmuller BV ('he Super Servant Two')
(1990):
Certainpropositions,establishedbythehighestauthority,arenotopentoquestion:
1. The doctrine of frustration was evolved to mitigate the rigour of the common
law's insistence on literal performance of absolute promises
The object of
the doctrine was to give effect to the demands of justice, to achieve a just and
reasonableresult,todowhatisreasonableandfair,asanexpedienttoescape
from injustice where such would result from enforcement of a contract in its
literal terms after a significant change in circumstances.
…
2. Since the effect of frustration is to kill the contract and discharge the parties
from further liability under it, the doctrine is not to be lightly invoked, must
be kept within very narrow limits and ought not to be extended.
3. Frustration brings the contract to an end forthwith, without more and
automatically.
4. The essence of frustration is that it should not be due to the act or election of
the party seeking to rely on it
A frustrating event must be some outside
event or extraneous change of situation.
…
5. Afrustratingeventmusttakeplacewithoutblameorfaultonthesideofthe
party seeking to rely on it.
