Sometimes a contract becomes impossible, illegal or pointless to perform through no fault of either party. The doctrine of frustration discharges the contract in these situations. It is Topic 3.3.3 in Paper 3 (Law of Contract) of Cambridge A Level Law 9084 and is regularly examined in both problem and essay questions.
The Origin of Frustration
Originally, contractual obligations were absolute: if you promised to do something, you were liable even if events made it impossible (Paradine v Jane (1647)). Taylor v Caldwell (1863) changed this, holding that a contract to hire a music hall was discharged when the hall burned down before the concerts.
The modern test comes from Davis Contractors v Fareham UDC (1956): a contract is frustrated when, without default of either party, performance becomes “radically different” from what was undertaken.
Types of Frustrating Event
1. Impossibility of performance
- Destruction of the subject matter – Taylor v Caldwell (1863).
- Unavailability of a party – illness or death in a personal contract (Condor v Baron Knights (1966), a drummer who became too ill to perform seven nights a week).
- Unavailability of the subject matter – e.g. a ship requisitioned for war (Jackson v Union Marine Insurance (1874)).
2. Supervening illegality
A change in the law makes performance illegal – for example, a wartime ban on trading with the enemy (Fibrosa v Fairbairn (1943)) or on building work (Metropolitan Water Board v Dick Kerr (1918)).
3. Change of circumstances making performance pointless
Where the central purpose of the contract disappears. In Krell v Henry (1903), a room hired to watch the coronation procession was frustrated when the procession was cancelled. Contrast Herne Bay Steamboat v Hutton (1903), where a boat trip to see the naval review and cruise round the fleet was not frustrated because part of the purpose remained.
Limits on the Doctrine
- Contractual provision – if the contract already deals with the event (e.g. a force majeure clause), frustration does not apply.
- Inconvenience or extra expense – a contract becoming more expensive or harder to perform is not enough (Davis Contractors v Fareham; Tsakiroglou v Noblee Thorl (1962), closure of the Suez Canal forcing a longer route).
- Foreseen or foreseeable events – where the parties could have foreseen and provided for the risk (Amalgamated Investment v John Walker (1977)).
- Self-induced frustration – a party cannot rely on an event they caused or chose (Maritime National Fish v Ocean Trawlers (1935); The Super Servant Two (1990)).
Effects of Frustration
At common law
The contract ends automatically from the moment of frustration; it is not void from the beginning. Originally losses “lay where they fell” (Chandler v Webster (1904)), which could be very unfair. Fibrosa (1943) allowed money to be recovered only where there was a total failure of consideration.
Law Reform (Frustrated Contracts) Act 1943
- s1(2) – money paid before frustration is recoverable, and money payable ceases to be payable. The court may allow the payee to keep or recover some of it to cover expenses incurred, if just.
- s1(3) – where one party has obtained a valuable benefit (other than money) before frustration, the court can order them to pay a just sum for it (BP Exploration v Hunt (No 2) (1979)).
Evaluation
- The doctrine is narrow – courts are reluctant to let parties escape bad bargains.
- The 1943 Act gives courts flexibility but outcomes can be unpredictable.
- Well-drafted force majeure clauses often matter more in practice than the doctrine itself, as seen in disputes after the COVID-19 pandemic.
For how frustration fits with other ways a contract ends, and with remedies, read our guide on damages for breach of contract.
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Frequently Asked Questions
Does a contract become frustrated if it becomes more expensive?
No. Increased cost or inconvenience is not enough, as shown in Davis Contractors v Fareham UDC and Tsakiroglou v Noblee Thorl.
What is the difference between Krell v Henry and Herne Bay Steamboat v Hutton?
In Krell the whole purpose of the contract disappeared; in Herne Bay part of the purpose (cruising round the fleet) could still be achieved, so there was no frustration.
Can money paid before frustration be recovered?
Yes, under s1(2) of the Law Reform (Frustrated Contracts) Act 1943, subject to the court allowing a deduction for expenses.
Final Thought
Frustration questions come down to three steps: identify the event, check the limits, then apply the effects under the 1943 Act. Learn a case for each and you will have a complete answer.