Frustration is an important concept in the world of contract law. It refers to a situation where circumstances beyond the control of the contracting parties render the performance of the contract impossible or radically different from what was initially intended. Frustration can give rise to various legal consequences, such as termination of the contract, discharge of liability, or a right to claim damages.
At common law, frustration is typically treated as a common law doctrine rather than a statutory rule. This means that the courts have developed the principle of frustration based on past cases and legal precedents, rather than relying on a specific legislative provision.
The effect of frustration on a contract at common law is primarily to discharge the parties from further performance of their obligations under the contract. This means that the contract comes to an end, and the parties are no longer bound by its terms and conditions. This applies even if the frustration occurs part-way through the contract performance, and it is impossible for one or both parties to complete their obligations.
One important consideration in cases of frustration is the allocation of risk between the parties. This means that if a particular event causing frustration was foreseeable or could have been avoided by one of the parties, that party may still be liable for any loss or damage caused by the frustration. For example, if a contract for the sale of goods is frustrated by a fire at the seller`s warehouse, the seller may be liable for any loss or damage suffered by the buyer if the seller failed to take reasonable precautions to prevent or mitigate the risk of fire.
Another consequence of frustration is that it may give rise to a right to claim damages. This applies when the frustration is caused by the breach of a fundamental term of the contract, such as a term that relates to the subject matter of the contract or goes to the root of the agreement. In such cases, the innocent party may be able to claim damages for any loss suffered as a result of the frustration.
In conclusion, frustration is an important concept in contract law that can have significant consequences for the parties involved. It is typically treated as a common law doctrine rather than a statutory rule, and its effect is primarily to discharge the parties from further performance of their obligations under the contract. However, the allocation of risk and the right to claim damages may also be relevant depending on the circumstances of each case. As such, it is important for parties entering into a contract to consider the possibility of frustration and how it may affect their rights and obligations.
