Discharge of contractual liability 143Performance required in a particular way
If a contract states that it should be performed in a certain way, then it will be frustrated if
it becomes impossible to perform in that way. For example, if a contract states that a cargo
should be carried on a particular ship then it will be frustrated if that ship sinks. This is the
case even if other ships could carry the cargo just as well.
Contract becomes more difficult to perform
A contract will not become frustrated merely because it becomes more difficult to perform.
For example, in Davis Contractors Ltdv Fareham Urban District Council (1956)the House
of Lords held that a contract to build 78 houses in eight months was not frustrated when a
shortage of labour and materials meant that the contract took 22 months to perform. The
builders should have considered that there might be shortages of labour and materials
before agreeing to do the job.
Force majeureclauses
If the parties to the contract foresee that there might be difficulties which they cannot
control and set out in the contract what should happen if these difficulties arise, the courts
will give effect to what has been agreed. Clauses which make such provisions are known
asforce majeureclauses. For example, in Davis Contractors Ltdv Fareham UDCthe parties
might have included a force majeureclause dealing with what the position should be if
there turned out to be a shortage of labour and materials. Such a clause might have stated
that if there was a shortage of labour and materials then the contract would be frustrated.
Or it might have said that, if there was a shortage of labour and materials, the contract
should not be frustrated but the builder should be given more time to do the work and paid
more money. Whatever the force majeureclause agreed, the court would have enforced the
clause.
Frustrating event is foreseen
If only one of the parties knows that the frustrating event might happen (or should
have known this) then that party cannot claim frustration. For example, in Walton Harvey
Ltdv Walker & Homfrays Ltd (1931)a hotel owner who had agreed to let the claimant
put advertisements on his hotel could not claim that the contract was frustrated when the
hotel was compulsorily demolished. The hotel owner was in breach of contract because
he knew that the hotel might be compulsorily demolished and the advertisers did not
know this.
One party took the risk
If the interpretation of the contract and the surrounding circumstances indicate that one
of the parties took the risk of the ‘frustrating’ event happening, then the contract will not
be frustrated. In Herne Bay Steam Boat Cov Hutton, for example, the court thought that
the commercial venture of hiring the steamboat was at the defendant’s risk and this was a
factor in deciding that the contract was not frustrated.
Self-induced frustration
A party to the contract who has brought about a certain event cannot claim that this event
frustrates the contract. Self-induced frustration is no frustration.