Advising a Client in Contract Law

Advising a Client in Contract Law When advising A there are three fundamental questions that must be

asked;

Is the event capable of frustrating the contract?

Are there any rules of law that would render the doctrine of

frustration inoperative?

What would be the effects if the contract were found frustrated?

In addressing the first question it must be recognised that the

hallmark of frustration is an event that occurs after the contract is

formed that radically alters the foundation or renders it physically

or legally impossible to perform. A simple example of this can be

found in Taylor v. Caldwell (1863) 3 B. & S. 826 where a contract for

hire of a music hall and gardens was found to be frustrated when the

music hall burnt down. The object of the contract was ascertained as

the hiring of the gardens and music hall for the purpose of using them

to stage four 'grand concerts and fetes'. When the hall was destroyed

by fire after the contract was formed, the performance was rendered

physically impossible. Thus it is essential when considering

frustration to identify the object of the contract and then to decide

whether the intervening event radically alters this object.

On the facts present if the object of the contract is merely to

produce computer-processing equipment, as B may argue, then the

foundation of the contract is not fundamentally altered and

frustration would be difficult to assert. However it is more likely

that the object of the contract is to produce computer-processing

equipment with a specific use dependant upon T's requirements and it

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that B has incurred considerable expense in the development of the

equipment and it is likely that the court will find £5000 for three

months work to be less than excessive recompense. On this point A

should be advised that he might lose all of his deposit and may be

required to pay even more.

However, s 1(3) of the 1943 Act allows courts to award a 'just sum'

where one party has obtained a valuable benefit under the contract. A

can argue that clause four has conferred a valuable benefit on B by

allowing him the extra business-generating kudos of being linked with

A. There is little in the way of valuable benefit conferred on A that

can offset this consideration, so it is contended that A may indeed

recover some or all of the £5000 deposit depending on the value placed

upon the valuable benefit by the court.