Frustration
| Author | John D. Mccamus |
| Profession | Professor of Law. Osgoode Hall Law School, York University |
| Pages | 566-611 |
CHAP TER 14
FRUSTR ATION
A. INTRODUCTION
The doctrine of fru stration may provide an excuse for non-perform ance
to a party whose abilit y to perform has been compromised by super-
vening events that occur after form ation of the agreement.1 In a n agre e-
ment to rent a concert hall, for example, the owner’s ability to perform
would be severely compromised if the build ing were to be destroyed by
fi re.2 A contract to sell and ship goods from Indi a to an Italian buyer
becomes more expensive to per form when the Suez Canal is unexpect-
edly closed.3 A contract to rent rooms on Pal l Mall w ith a v iew of the
coronation procession of Edward VII becomes pointless when the pro-
cession i s cancelle d.4 A contractor is hired to construct a pa rticular
facility and is t hen ordered by the government to discontinue the work
under wartime regulations.5 In such cases, provided that the matter
1 See generally G.H. Treitel , Frustration and Force Majeure, 2d ed. (London:
Thomson Sweet & Max well, 2004); 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 D octrine of Frustrat ion
in Canada” in G.H.L . Fridman, ed., Studies in Cana dian Business Law (Toronto:
Butterwort hs, 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.).
5Metropolitan Water Board v. Dick, Kerr & Co. Ltd ., [1918] A.C. 119 (H.L.).
566
Frustrat ion 567
has not been specifi cally provided for in the agreement, t he doctrine of
frustration may have the effect of discha rging the agreement, thereby
releasing the parties from any further obligation to perform.
In cases of thi s kind, the part ies have entered into an agreement
on the assumption that such problems would not materia lize. Cases
of frustration are thus quite similar to ca ses of mistaken a ssumptions
concerning the facts ex isting at the time an ag reement is entered into,
a matter that we consider elsewhere.6 While mistaken a ssumption s
cases deal w ith assumptions concerning facts in existence at the time
of formation of the contract, frust ration cases dea l with assumpt ions
concerning future events. The close relationship between mistaken
assumptions and fr ustration case s can 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 originally planned corona-
tion procession had already been cancelled, the case would be one of
mistaken assumptions 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 with mistaken
assumptions doctr ine, then, frust ration doctrine must fi nd an appro-
priate balance bet ween the inclination to hold people to their barga ins,
notwithstanding the fact that the bargain has become unexpectedly
less attractive to them, and, on the other hand, an inclin ation to relieve
parties from thei r bargains where a refus al 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 fr ustration and
the traditional c ategories of its application will be considered. It will
be suggested that the analytical model t hat has developed in the law of
mistaken assumptions — ri sk-allocation a nalysis — may also be fruit-
fully employed in the context of case s of frustration. We shall then turn
to consider t he application of fru stration doctri ne in the partic ular con-
texts of increased expense or commercial impracticability, agreements
to transfer interest s in land and frustration resulting f rom choices
made by the party subject to the obligation to perform. Obviously,
parties who anticipate the possibility of interference with contractual
performance by super vening events may wish to stipulate for the con-
sequences of such events. Such provisions t ypically relieve parties from
the burden of performance when certain stipulated events of this kind
occur. The interpretation of these so-cal led force majeure clauses will
6 See Chapter 13, sect ion C.
7Griffi th v. Brymer (1903), 19 T.L.R. 434.
THE LAW OF CONTR ACTS568
be briefl y considered before turning to an account of the consequences
of frustration at common law.
B. DEVELOPMENT OF THE DOCTRINE
The evolution of the doctrine of frustration in Engli sh 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 excuse for non-performance of
an agreement. The leading case of Pa radine v. Jane,8 de cided in 1647, wa s
accepted by the courts9 as establishing the rule of absolute contracts.
Under this approach, unex pected changes in c ircumstances that sub-
stantially undermine the value of a contract for a promisor const itute
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 si x years of occupancy, the tenant had
been dispossessed, as a result of the actions of enemies of t he King, for
a period of approximately two years. The tenant ref used 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 “notwith standing any accident
by i nevita ble nece ssity, be cause h e might h ave prov ided aga inst it by his
contract.”10 In the absen ce of so provid ing, h owever, the obl igati on is ab -
solute. Thus, “if the lessee covenant to repair a house, t hough it be burnt
by lightning or throw n down 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 promisor in a contract of personal serv ice12
and the enactment of subsequent legislation rendering performance il-
legal13 were recognized defences to the promisee’s claim. A substantial
inroad on the doctri ne was not made, however, until the second phase
in the development of the doctrine initiated by Blackburn J.’s decision
8 (1647), Aleyn 26 , 82 E.R. 897.
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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