Contract Law

2466 Words Dec 22nd, 2010 10 Pages
“The parties to an executory contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate – a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to the execution, or the like. Yet this does not in itself affect the bargain which they have made…” (per Lord Simon in British Movietonews Ltd. v. London and District Cinemas [1952] A.C. 166 at 185).

Discuss this dictum and explain the respects in which it needs to be qualified.

This quote refers to the doctrine of frustration. In order to adhere to the essay question, it is important to establish what frustration is. The essence of frustration was identified in Davis Contractors Ltd
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In the last phrase of this dictum , Lord Simon concluded that although exceptional circumstances may exist, courts must take cautious steps when walking through the door of interpretation and they must never turn their backs on the terms contained in contracts. To Invalidate a contract may carry a greater legal consequence than initially foreseen by the courts. A question to raise is; what if a party to the contract anticipated a future turn of event but assessed the risk involved and notwithstanding, entered into the contract. Should the court step in to cut the tight rope from such a person’s neck when he or she is facing the guillotine?

The role of the courts is to seek justice and not to bail us out when things are not going our way. For now, there are certain events that can amount to frustration and the courts can fall back to these precedents to make an informed decision.

These events include physical impossibility, non-occurrence of a particular event, supervening illegality, death or incapacity for personal service, requisitioning of ships and interferences with chaterparties, sale and carriage of goods, building contracts, change in the law and performance of only one party affected. Only few of these will be discussed further.

Physical impossibility is concerned with where the performance

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