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Frustration


Unforeseen Circumstances
Last updated: 06-Oct-2014

Per Goddard J in Tatem Ltd. v Gamboa [1939] 1 K.B. 132; [1938] 3 All E.R. 135:

The parties may make provision about what is to happen in the event of this destruction taking place, but if the true foundation of the doctrine [of frustration] is that once the subject-matter of the contract is destroyed, or the existence of a certain state of facts has come to an end, the contract is at an end, that result follows whether or not the event causing it was contemplated by the parties. It seems to me, therefore, that when one uses the expression 'unforeseen circumstances' in relation to the frustration of the performance of a contract one is really dealing with circumstances which are unprovided for, circumstances for which (and in the case of a written contract one only has to look at the document) the contract makes no provision.

In Societe Franco Tunisienne d'Armement v Sidermar S.P.A. [1961] 2 Q.B. 278 by Pearson J at p. 299 :

Does the existence of a possibility, appreciated by both parties at the time of making the contract, that a certain event may occur necessarily prevent the frustration of the contract by that event when it does occur? In other words, does the frustrating event have to be unforeseen in the sense that the possibility of it has not been appreciated by the parties? In my view, on principle, the answer should be "No," because we are concerned with the construction of the contract, and it must often happen that contracting parties appreciate a possibility but do not provide for it in their contract. They cannot provide for every possible event, and the particular event concerned may appear to them to be unlikely, or they may be unable to work out the consequences of it, or may be unable to agree on the provisions to be made with regard to it, or they may simply take the chance that it may occur and frustrate their contract. For example, persons making contracts in the summer of the year 1939 must have appreciated the possibility of an outbreak of war with Germany, but such contracts could nevertheless be frustrated by the outbreak of war when it occurred.


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