Limitations of Frustration

In contract law, frustration is a doctrine that refers to the termination of a contract due to unforeseen circumstances that make its performance impossible or radically different from what was initially contemplated by the parties. While frustration serves as a useful tool to address unexpected events, it is not without limitations (DiMatteo et al., 2005).

One limitation of frustration in contract law is the presence of expressed terms that exclude liability. These terms, such as force majeure and hardship clauses, are commonly included in contracts to address specific situations that may arise and relieve parties from liability. However, the limitations of frustration in contract law extend beyond the presence of expressed terms. Another significant limitation is the requirement of the event to be truly unforeseen and unforeseeable at the time of contract formation. This requirement poses challenges in cases where events could have been anticipated or mitigated with proper risk assessment and planning.

Furthermore, the doctrine of frustration does not apply to situations where the frustrating event was caused by the fault or negligence of one party. The case of Davis Contractors Ltd v Fareham Urban illustrates this limitation. In this case, the contractor entered into a contract to build houses and encountered difficulties due to unforeseen ground conditions. The court held that the frustration of the contract was not applicable as the contractor had assumed the risk and responsibility for any unforeseen problems. This limitation highlights the importance of parties' own actions and responsibilities in relation to the frustration of a contract.

Another aspect that limits the application of frustration is the concept of self-induced frustration. Self-induced frustration refers to situations where a party deliberately brings about the circumstances that render the contract impossible to perform (Hadfield, 1994). This limitation was illustrated in the case of Maritime National Fish Ltd v Ocean Trawlers Ltd, where the court held that a party cannot rely on frustration if they have caused or contributed to the frustrating event themselves. The limitations of frustration in contract law are not only relevant to the UK but also have been discussed in various cases (Mannolini, 1996). For example, in The Super Servant Two, the court held that frustration does not apply if the event causing the frustration was foreseeable at the time of contract formation. The presence of expressed terms that exclude liability, such as force majeure and hardship clauses, is one limitation of frustration. Force majeure clauses are contractual provisions that excuse the parties from performance when certain unforeseen events occur. These clauses typically list specific events such as natural disasters, war, or government actions that would qualify as force majeure.One relevant case in the UK is the case of Codelfa Construction Pty Ltd v State Rail Authority of New South Wales.In this case, the court held that a force majeure clause was valid and enforceable, and thus the frustration of the contract did not apply to the party relying on the force majeure clause. However, it is important to critically analyze and question the limitations of frustration in contract law.