School Papers

The the contract. This means that interruption of

The contract may be discharged on the basis of frustration when something occurs after the formation of the contract. Frustration is an event that occurs that would lead to cause the contract to be carried out and it is out of both parties power of control. Frustration under English law is a belief, which plays the role as the tool to discharge contracts where an unexpected and unpredictable event that would changed contractual commitment impossible, or obviously modifies the party’s initial and main purpose for entering into the contract.What actually happens is that an interrupting event occurs that prevents the performance of a contract when no party is at fault. This event turns performance physically, commercially or legally impossible or transforms the obligations of the contract completely different from those, which were agreed at first place.However, there is no direct list of events that leads to the existence of frustration. Because of this the doctrine has been developed and referred on a case-by-case method. The usual law belief of frustration comes up to invalidate contractual obligations when no party is at fault. This event turns performance physically, commercially or legally impossible or transforms the obligations of the contract completely different from what was agreed initially. Courts these days are reluctant to discharge contracts on the grounds of frustration.Frustration happens when it is impossible to perform the contract. This means that interruption of events occur that may cause impossible the performance in occasions that involve a definitive damage of the subject matter. However if the subject matter is in anyway damaged, this does not always indicate that it is frustration and hence discharge the contract. The risk of loss is an essential element that should be taken into consideration.A situation that will give you a better picture of the who frustration topic is where a person A has agreed to install a radio in B’s diner but before the work was even done, a fire took place and the diner was burnt hence the contract is frustrated but A is obliged to redo the work without any obligation from the other party. Other impossibility also includes death or illness of a party, outbreak of war, strikes, act of God, client underestimates the scope of work and not willing to pay extra to complete the job, natural disaster , overlapping of authorities ¬≠or the project did not deliver on time due to lack of cooperation between parties.Subsequent illegality is another issue that can frustrate a contract. Let’s say parties are ready to commit but changes in the law restrict it, for instance the law in another country changes or the law changes due to an outbreak of war. Another situation that demonstrate frustrations is commercial sterility where this arises when the main or the initial purpose of the contract is erased unless other purposes remain.Considering frustration may occur in any situations, the courts have highlighted the unexpected nature of the event. This being said, no frustration can actually be recognised if at the time the contract happened, either party has foreseen the event would possibly by any chance happen. This situation is based on the hypothesis that even when the parties willingly accepted these circumstances, the parties agreed on the possibility that a risk may ariseFrustration fall under section 57(2) of Contract Act 1950 for Malaysian position. According to Contract act, (1) an agreement to do an act impossible in itself is void,(2) A contract to do an act which, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful and (3) where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, the promisor must make compensation to the promisee for any loss which the promisee sustains through the non-performance of the promise.So , we can conclude that there are two situation which are considered under this law; impossibility and unlawfulness. The impossibility covered the damage to particular thing, damage of something essential, death or incapacity, unavailability, and failure of particular source. This can be explained by the case of Howell v Coupland. The defendant agreed to sell 200 tons of potatoes but the potatoes did not grew as what the defendant expected . Thus, the defendant cannot fulfill the agreement and only able to deliver 80 tons of potatoes.It will be impossible to perform when the goods itself is not available. For unlawfulness, there are two position which are trading with enemies and approval from authorities. The first situation can be shown in the case of Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd. The defendant is an English company; Fairbairn while the plaintiff was a company which is the Fibrosa.The contract to sell the machinery is void when the country was occupied by the enemies. The plaintiff had paid the defendant and the defendant refused to return the money as it is considered to pay the amount of work that had been done on the machinery. However the court held that the plaintiff were able to recover the $1000 but not the machine. Next, the case of Lee Seng Hock v Fatimah bte Zain discussed about the second situation. The plaintiff want to buy a piece of land and the defendant act on behalf of the deceased. Later, the government required the whole land. The court was held and it made the agreement between the plaintiff and defendant terminate to be exists and performance becomes impossible. As for the conclusion, frustration contract is void due to some changes in circumstance that is unlawful.