2 Andrew owns the Hotel Splendid. In May Bruce reserves and pays for accommodation
in the hotel, including a very large meeting-room. This is for himself and for some
business colleagues for a conference in July. In June Andrew informs Bruce that a fire has
damaged most of the hotel, but that the group could have rooms in a nearby guest
house which Andrew also owns. However, the facilities are inferior and there are no
conference rooms. Bruce wishes to cancel the booking, but Andrew insists that the
payment can not be refunded.
Advise Bruce as to how his contracts with Andrew and the members of the group may
be discharged.
3 Critically discuss the ways in which a contract may be discharged.
4 ‘The general rule is that performance, to be effective, must be exact and complete.'
Discuss whether the strict application of this rule leads to injustice.
OCR 4-module specimen paper
5 How have the courts attempted to place limits on the doctrine of frustration, and why
should they wish to do so?
6 To what extent does the doctrine of frustration give the courts the opportunity to
apportion loss between two relatively innocent parties?
7 ‘Sometimes it is convenient for one party to claim that a contract has been frustrated
rather than breached.’
(a) When is a contract frustrated?
(b) Critically discus the effect that frustration will have on the contract.
8 An English manufacturing company signs a contract on 1st January to manufacture
machine parts for a Ruritanian company. Both companies know that an export licence
will be required. The contract, worth £80,000 in total, states that the goods will be
delivered in three instalments with payments of £20,000 on signing, and £20,000 after
each instalment, payment within 30 days and a final delivery on 1st September.The English
company receives only £10,000 on signing but decides to send the instalment when ready
and claim £30,000.They apply for an export licence but are only granted one for the first
instalment on 1st April.The government department issuing the licences states that each
instalment requires a separate licence.The English company finds that its prices fail to
cover the costs of production because of a fall in the value of the pound after the first
instalment is despatched. On 15th May the government department refuses to issue any
further export licences in accordance with a United Nations resolution passed on 1st
May introducing trade sanctions against Ruritania which makes the machine parts
prohibited goods, and the three remaining instalments thus impossible.
Discuss the liability of the English company.
OCR 2002
A further ‘dilemma’ style question on frustration can be found in Part 7 of the book.224 Contract law