Frustration
| Author | John D. McCamus |
| Pages | 599-645 |
599
CHAP TER 14
FRUSTR ATION
A. INTRODUCTION
The doctrine of frustration m ay provide an excuse for non-per formance
to a party whose abilit y to perform has been compromised by super-
vening events that occur afte r formation of the agree ment.1 In an agree-
ment to rent a concert hall, for example, the owner’s ability to perform
would be severely compromised if the building were to be destroyed by
fire.2 A contract to sell and ship goods from India to an Itali an buyer
becomes more expensive to per form when the Suez Canal is unexpect-
edly closed.3 A contract to rent rooms on Pall Mall with a view of the
coronation procession of Edward VII becomes pointless when the pro-
cession is cancelled .4 A contractor is hired to construct a particular
facility and is then ordered by t he government to discontinue the work
1 See generally G.H. Treitel, Fru stration and Force Majeure, 2d ed. (London:
Thomson Sweet & Maxwe ll, 2004) [Treitel]; E. McKendrick, ed., Force Majeure
and Frustration of Cont ract, 2d ed. (London: Lloyd’s of London Press, 1995) [Mc-
Kendrick]. And see D. Percy, “The Application of the Doct rine of Frustration
in Canada” in G.H.L . Fridman, ed., Studies in Canad ian Business Law (Toronto:
Butterworth s, 1971) c. 3.
2Tayl or v. Cald well (1863), 3 B. & S. 826, 122 E.R. 309 (Q.B.).
3Tsakiroglou & Co. v. Noblee Thorl G.m.b.H., [1962] A.C. 93.
4Krell v. Henry, [1903] 2 K.B. 740 (C.A.) [Krell].
THE LAW OF CONTR ACTS600
under wartime regulat ions.5 In such cases, provided that the matter
has not been specifically provided for in the agreement, the doctrine of
frustration may h ave the effect of discharging t he agreement, thereby
releasing the part ies from any further obligation to per form.
In cases of thi s kind, the partie s have entered into an agreement
on the assumption that such problems would not materiali ze. Cases
of frustration are thus quite similar to case s of mistaken assumptions
concerning the facts ex isting at the time an agreement is entered into,
a matter that we consider elsewhere.6 While mista ken assumptions
cases deal w ith assumptions concerni ng facts in existence at the t ime
of formation of the contract, frust ration cases deal w ith assumptions
concerning future events. The close relationship between mi staken
assumptions and fr ustration cases c an be neatly illustrated by refer-
ence to the coronation cases ar ising from the postponed coronation
of Edward VII. If the contract entered into to rent rooms on Pall Mall
had been entered into at a time when the orig inally planned corona-
tion procession had already been cancelled, the case would be one of
mistaken as sumptions as to existing facts.7 If, however, the cancella-
tion of the procession was announced only after the contract had been
entered into, the case would be one of frustration. As w ith mistaken
assumptions doctr ine, then, frustr ation doctrine must find an appro-
priate balance between the inclination to hold people to their bargains,
notwithstanding the fact that the bargain has become unexpectedly
less attractive to them, and, on the other h and, an inclination to relieve
parties from thei r bargains where a refusal to do so appears unjust and
may result in the unjust enr ichment of the other party.
In this chapter, the development of the doctrine of frustration and
the traditional categories of its application will be considered. It wi ll
be suggested that the an alytical model th at has developed in the law
of mistaken assumptions — risk-allocation analysi s — may also be
fruitfully employed in the context of case s of fru stration. We sha ll
then turn to consider the application of frustration doctrine in the
particular contexts of increased expense or commercial impracticabil-
ity, agreements to transfer interests in l and, and frustration resulting
from choices made by the party subject to the obligation to perform.
Obviously, parties who anticipate the possibility of inter ference with
contractual performance by supervening events may w ish to stipulate
for the consequences of such events. Such provisions typically relieve
5Metropolitan Water Board v. Dick, Kerr & Co. Ltd., [1918] A.C. 119 (H.L.) [Metro-
politan Water Board].
6 See Chapter 13, Section C.
7Griffith v. Brymer (1903), 19 T.L .R. 434.
Frustrat ion 601
parties from the burden of per formance when certain stipulated events
of this kind occur. The interpretation of these force majeure clauses will
be briefly considered before turn ing to an account of the consequences
of frustration at com mon law.
B. DEVELOPMENT OF THE DOCTRINE
The evolution of the doctrine of frustration in English law may be char-
acterized as having three phases or stages of development. In the earli-
est phase, the common law appeared to be most reluctant to permit
changing circumstances to provide an excu se for non-performance of
an agreement. The leading case of Paradine v. Jane,8 decided in 1647, wa s
accepted by the courts9 as establishing the rule of absolute contracts.
Under this approach, unexpected changes in circumsta nces that sub-
stantially undermine the value of a contract for a promisor constitute
no defence to a claim brought by the promisee to enforce the agreement
against the promisor. On its facts, Paradine v. Jane involved a twenty-
one-year lease of a farm. After six yea rs of occupancy, the tenant had
been disposse ssed, as a result of the actions of enemies of the King, for
a period of approximately two years. The tenant refused to pay rent for
the period during wh ich he could not work the land. The landlord’s
claim for the rent enjoyed success, however, as the tenant was obliged
to perform his contractual obligations “notwithstanding any accident
by inevit able necessity, because he m ight have provided again st it by his
contract.”10 In the absence of so providing, however, the obligation is ab-
solute. Thus, “if the lessee covenant to repair a house, t hough it be burnt
by lightning or thrown dow n by enemies, yet he ought to repair it.”11
Even at this early stage of development, however, there was some
authority for the existence of exceptions to th is general rule of absolute
contracts. The death of the promi sor in a contract of personal service12
and the enactment of subsequent legislation rendering performance il-
legal13 were recognized defences to the promisee’s claim. A substantial
inroad on the doctrine was not made, however, until the second phase
8 (1647), Aleyn 26, 82 E.R. 897.
9 See, for example, Walt on v. Wa terho use (1673), 2 Wms. Saund. 420, 85 E.R. 1233;
Hadley v. Clark (1799), 8 T.R. 259, 101 E.R. 1377; Atkinson v. Ritchie (1809), 10
East 530, 103 E.R. 877.
10 Above note 8 at 27 (Aleyn).
11 Ibid.
12 Hyde v. Dean of Windsor (1597), Cro. Eliz. 552, 78 E.R. 798.
13 Abbot of Westminster v. Clerke (1536–37), 1 Dyer 27a, 73 E.R. 59.
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