A. Introduction

• Author: John D. McCamus
• Profession: Professor of Law. Osgoode Hall Law School, York University
• Pages: 566-568

Page 566

The doctrine of frustration may provide an excuse for non-performance to a party whose ability to perform has been compromised by super-vening events that occur after formation of the agreement.¹In an agreement 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.²A contract to sell and ship goods from India to an Italian buyer becomes more expensive to perform when the Suez Canal is unexpectedly closed.³A contract to rent rooms on Pall Mall with a view of the coronation procession of Edward VII becomes pointless when the procession is cancelled.⁴A contractor is hired to construct a particular facility and is then ordered by the government to discontinue the work under wartime regulations.⁵In such cases, provided that the matter

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has not been specifically provided for in the agreement, the doctrine of frustration may have the effect of discharging the agreement, thereby releasing the parties from any further obligation to perform.

In cases of this kind, the parties have entered into an agreement on the assumption that such problems would not materialize. Cases of frustration are thus quite similar to cases of mistaken assumptions concerning the facts existing at the time an agreement is entered into, a matter that we consider elsewhere.⁶While mistaken assumptions cases deal with assumptions concerning facts in existence at the time of formation of the contract, frustration cases deal with assumptions concerning future events. The close relationship between mistaken assumptions and frustration cases can be neatly illustrated by reference to the coronation cases arising 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 coronation procession had already been cancelled, the case would be one of mistaken assumptions as to existing facts.⁷If, however, the cancellation of the procession was announced only after the contract had been entered into, the case would be one of frustration. As with mistaken assumptions doctrine, then, frustration doctrine must find an appropriate 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 hand, an inclination to relieve parties from their bargains where a refusal to do so...