BetterLawNotes-5 (2)

CONTRACT LAW

Bob:

It seems to reasonable to assume that the contract will be frustrated, applying the test in National Carriers v Panalpina with the consequence that both parties are discharged at common law from their primary obligation to perform the contract. Note that Bob will be unlikely to recover any sums under LR(FC)A 1943. S 1(2) does not apply because no sums were paid or payable prior to the frustrating event. Nor is anything likely be awarded under s 1(3) since it seems doubtful that Alf can be said to have derived any benefit from Bob’s performance up to the time of the fire: Appleby v Myers.

 

Chris:

Again, it seems reasonable to assume the contract is frustrated, applying the same test. This means that Alf will not be liable for his failure to complete performance of the contract, nor will Chris be under any obligation to pay the final balance. Better answers may note that Alf will probably have no liability for the destruction of the car: his duty would merely have been to takes reasonable care of the vehicle while in his care. Chris presumably would claim the return of his £10,000 while Alf would want to retain all or part of it to off-set his expenditure. Students will need to apply s 1(2). The cost of the new engine Alf agreed to buy will not be taken into account because the expenditure was incurred after the frustrating event. Better answers will give some indication of the likely just sum together with supporting reasoning.

 

Dan:

While Alf may prefer for the contract to be treated as frustrated, since presumably he no longer has any need for the car, it seems more likely that a court would hold that the contract remains binding: just because performance has become pointless for one party does not mean the contract will be treated as discharged. As such, Alf will be liable to pay the price provided that Dan is able and willing to proceed.

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