BetterLawNotes-5 (2)


A good answer ought to explain when a contract will be frustrated and whether the requirements are met here. Better answers will cite supporting authorities and may also raise whether the agreed damages clause might be construed as excluding the operation of the doctrine of frustration altogether (or, alternatively, as excluding the operation of the LR(FC)A 1943 (see below)).

The answer might then go on to discuss the consequences of the contract being frustrated. Better answers will note that this is a matter of common law and statute. You might point out that one consequence of frustration would be that Slope’s liability under the agreed compensation clause will have been discharged before it accrued.

You should then go on to consider the application of ss 1(2) and 1(3) of the Act.

Under s 1(2) the issue is whether Slope can retain any part of the initial payment of £5,000 to cover her expenditure on the computer as well, potentially, as a sum in respect of her work on the book (s 1(4)).

Under s 1(3) the principal issue is whether LUP must make a payment in respect of the benefit acquired through delivery of the four chapters. You might identify an issue as to the payment of £10,000 for the rights to the remedies chapter, as s 1(3) only applies to benefits received before the frustrating event. On the face of it, this would exclude taking account of the payment from Oxbridge Press. However, you could make an argument to the effect that the benefit was received prior to frustration and that the payment is merely evidence of the value of the benefit received in July.

You should also note that LUP’s expenditure on marketing materials will not be taken into account under 1(3) because the expenditure was incurred after the contract was frustrated: s 1(3)(a).

Note also that the court’s conclusion on what constitutes a just sum under 1(3) will take account of any sum retained by Slope under 1(2).

As mentioned above, you might raise the point that the agreed damages clause might take the contract outside the Act pursuant to s 2(3), although the clause is probably best construed as intended to apply only to non-delivery amounting to a breach of contract.

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