Lecture 10

1. Lecture 10 Termination and Frustration

2. Requirements for election • Unequival words or conduct • Communication to the promisor

3. Election to continue • Unequivocal words/conduct indicating choice to continue • Must know of the facts giving rise to the right to terminate

4. Estoppel as restriction • Representation made to other party • Other party relied on it • Unconscionable to go back on it

5. Effect of termination • all parties are discharged • all substantive terms become unenforceable; procedural terms, such as an agreement to seek mediation, are enforceable • all future obligations are unenforceable • all unconditionally accrued rights remain on foot (eg damages for breach)

6. Concept “[F]rustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not this that I promised.” - Lord Radcliffe, Davis Contractors Ltd v Fareham UDC [1956] AC 696 at 729

7. Effect of Frustration • Contract stops automatically at point where frustration occurred • Future obligations unenforceab;e • Uncondtionally accrued rights remain on foot • Right to damages survives if breach occurs prior to frustration

8. Total Failure of Consideration ‘There is failure of consideration if a promisor does not receive the performance (agreed return) which was promised as the price of (in return for) a money payment made by the promisor.’ Carter, Peden and Tolhurst, Cases and Materials on Contract Law in Australia at 789.