Frustration cases

Performance is illegal (supervening illegality)

B v Fairbairn [1943] AC 32
Facts:
- Pf made advance payment of 1000 pounds to Df for a machine to de delivered to Poland
- Before shipping, German occupied Poland
Held:
- Contract frustrated
- Court allowed Pf to recover 100 pounds on the basis of unjust enrichment
- Total failure of consideration

Performance impossible (supervening impossibility)

Destruction of subject matter

Taylor v Caldwell [1863] 3 B & S 826
Facts:
- Pf rented music hall from Df, but music hall burned down before the concerts
Held:
- Parties contracted on the basis of continued existence of the music hall as implied term as
it is essential for the concert
- Impossible for performance of contract

Death or incapacitation of contracting party

Norcutt v Universal Equipment Co [1986] 3 All ER 582
Facts:
- Pf, a machinist contracted with Df
- Pf heart attack, diagnosed never to be able to work again
- Pf sought to claim sick pay from initial absence to termination of contract
Held:
- Contract frustrated from the point of diagnosis, cannot claim sick pay
- For frustration to occur, dead or incapacitated party must have special knowledge to carry
out a specific job, and requires personal performance of the party.

Unavailability of subject matter

Lim Kim Som v Sheriffa Taibah bte Abdul Rahma [1994] 1 SLR(R) 233
Facts:
- Parties contracted sale and purchase agreement for property
- Gahmen issue statement of compulsory acquisition of land
Held:
- Contract frustrated
- Df could recover deposit

Failure of source of supply

Source specified in the contract

Howell v Coupland [1876] 1 QBD 258
Facts:
- Parties contracted for potatoes of specific kind grown in specific location
 - Outbreak of fire, supplier could not produce potatoes from the location, shortfall made up
from another location
Held:
- Contract frustrated
- Not mere contract of delivery as parties have specified in contract the location the
potatoes must come from

Unspecified source only intended by one party

Blackburn Bobbin Co Ltd v TW Allen & Sons Ltd [1918] 2 KB 467
Facts:
- Parties contracts for Finland birch timber, standard practice is to be shipped from Finland
- War broke out and German declared timber contraband
- Can still be delivered indirectly through Scandinavia
Held:
- No frustration
- No common intention that the timber come from a particular source
- Only 1 party intended it to be from Finland, not specified in the contract

Both parties intended an unspecified source

Alliance Concrete v Sato Kogyo [55]
- May frustrate a contract where both parties contemplated or could reasonably have
contemplated that unspecified source
- Subject to ‘radical change in obligation’ test
- If source not specified as term in the contract, strict performance still technically possible
but not the same as originally intended by parties.

Frustration of purpose

Foundation of contract ceases to exist

Krell v Henry [1903] 2 KB 740
Facts:
- Pf advertise rooms to be rented to view Royal coronation
- Coronation cancelled as King fell ill
Held:
- Contract frustrated
- Purpose of rent is to view coronation, foundation of contract destroyed

Many purpose to the contract, only 1 purpose fails

Herne Bay Steamboat Co v Hutton [1903] 2 KB 683
Facts:
- Df rented boat from Pf to take people to see naval review arising from Royal coronation
and also to tour the fleet
- Navel review cancelled as coronation cancelled, but fleet remained
Held:
- No frustration
- Still possible to tour the fleet
- Substantial part of the contract can be fulfilled, naval review is not the only foundation of
the contract
Supervening impracticability

Impracticability arise from increased cost of performance rarely discharges a contract

Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
Facts:
- Pf agreed to build council house for Df in 8 months, but Df took 22 months due to severe
labour shortage
- Df paid contract price, Pf argued frustration in attempt to get higher price
Held:
- Labour shortage on made the contract more onerous and expensive
- No radical change in obligation (test for frustration that can be applied widely)
- Situation for frustration must be very severe, such that change in the significance of the
obligation, if performed, would be a different thing from that contracted for

Holcim (Singapore) Pte Ltd v Kwan Yong Construction Pte Ltd [2009] 2 SLR(R) 193
Facts:
- Pf supplier of concrete, Df construction company
- Indonesia sand ban
- Pf claimed sum of $305,153.40 and rely on force majeure clause to justify suspension of
performance of obligation
- Df claimed clause was introduced under economic duress and no consideration when
clause introduced, hence unenforceable
Held:
- Frustration not from increased anticipated expenses, but from impossibility due to sand
ban
- All sand in the building industry sourced from Indonesia
- Df failed to mitigate losses as Df did not assist Pf with obtaining sand from gahmen
stockpile.

High degree of impracticability may frustrate

M P Bilt Pte Ltd v Edy Yumianto [1990] 2 SLR(R) 655
Obiter Dicta: Runaway inflation in Indonesia insufficient for frustration but exceptionally high
inflation may warrant finding of frustration.

Temporary impossibility (supervening delay)

Delay makes performance useless to recipient party

Jackson v Union Marine Insurance Co Ltd [1874] LR 10 CP 125
Facts:
- Vessel to go from Liverpool to Newport to load rails to be delivered to San Francisco, but
ran aground on the way to Newport
- Spring voyage became Autumn voyage
Held:
- Contract frustrated
- Basis of contract was for ship to arrive in time for contemplated commercial venture
- Late performance radically different from what both parties contemplated at time of
contract

Delay makes performance too onerous to the party performing

Metropolitan Water Board v Dick, Kerr & Co [1918] AC 119
Facts:
 - Pf contracted Df to construct a reservoir in 6 years
- Contract allowed for generous time extension
- A few months after conclusion of contract government ordered work to be ceased and
Df’s plant to be sold
Held:
- Contract frustrated
- Government order caused an indefinite delay, works even if resumed would be at the
later end of the 6 year contract
- At that time, labour and material conditions would become ‘absolutely different’
- Even with time extension clause, it was unlikely to intend to cover indefinite delay

Inconvenience is not ‘more onerous’ (smaller degree)

Tsakiroglou & Co Ltd v Noblee Thorl Gmbh [1962] AC 93
Facts:
- Ap contracted with Rp to sell Df peanuts
- Contract was cost, insurance, freight (CIF)
- Both parties intended to ship via Suez Canal but Suez Canal closed
- Ap refused to ship due to increased cost and delay, Rp sued
Held:
- No frustration
- In CIF contracts, Suez Canal not implied term although customary, reasonable route can
be taken
- New route not fundamentally different. Therefore no radical change in obligations
although different method of performance is necessary

Self-induced frustration

Choice
Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] AC 524
Facts:
- Pf operates 5 fishing boats, 3 owned by Pf, 2 chartered from Df
- Pf applied for 5 fishing boat licenses but only granted 3
- Used 2 for own boats and 1 for Df boats, claimed frustration for the other Df’s boat and
refused to pay
Held:
- No frustration
- Frustration self-induced as Pf could have allocated license to Df’s boat
- Refusal to grant license by authorities is not frustration as Pf could still carry out contract

J Lauritzen AS v Wijsmuller BV [1930] 1 Lloyd’s Rep 1 (The “Super Servant”)

Facts:
- Df contracted to transport Pf’s drilling rig, and allowed for either of Df’s ships to be used
- Df elected to use “Super Servant Two” and “Super Servant One” was allocated to another
contract
- “Super Servant Two” sank and Df claimed frustration
Held:
- No frustration
- Df could have used SS1 when SS2 sank as contract provided for alternative
Foreseen or foreseeable events

Supervening event cannot be foreseen or foreseeable

Alliance Concrete Singapore Pte Ltd v Sato Kogyo (S) Pte Ltd [2014] 3 SLR 857
Facts:
- Ap supplied concrete to Rp
- Export of sand, a main ingredient for the concrete, was banned by Indonesian gahmen
- SG gahmen release sand from stockpile to Sato, but there was still shortfall
- Ap sought to increase price, Rp argued to maintain original contract price
- Ap sued for increased price, Rp countersued for losses by Ap’s repudiatory breach
- Ap argued no breach due to frustration
Held:
- Contract frustrated
- Sand ban is supervening event not within reasonable control of parties, and cannot be
foreseen, nor is it reasonably foreseeable at the time contract was entered into

Foreseeability may not be sufficient to reject frustration

Lim Kim Som v Sheriffa Taibah bte Abdul Rahman [1994] 1 SLR(R) 233
Held:
- Rigid insistence on the fact that the event ought to have been foreseen cannot be an
adequate solution as it would negate the Davis Contractors test

Foreseeable not frustrated, frustration cannot be invoked lightly

Glahe International Expo AG v ACS Computer Pte Ltd [1999] 1 SLR(R) 945
Facts:
- Pf contracted with Df to purchase computers to be exported to Russia
- Pf made advance payment, political and economic events in Russia led to heavy tax on
computers and drop in exchange rate
- Pf claimed frustration
Held:
- No frustration
- Event was foreseen or reasonably foreseeable because likelihood of occurrence is
sufficiently high

HDB v Microform Precision Industries [2003] SGHC 214

Facts:
- Parties contracted for lease of a plot of land
- Land was land-locked and completely inaccessible
- Df failed to get access to land from gahmen and claimed frustration
Held:
- Df contemplated the risk that gahmen would not grant access and yet concluded contract

Force Majeure clauses (separate from frustration)

If FM clauses are invoked there is no frustration, it is either or

Party seeking to benefit from the clause only has to take steps to account for foreseeable
contingency
The “Neptune Agate” [1994] SGHC 187
Facts:
- Pf contracted with Df to carry 6 containers from Taiwan to Ireland
 - 2 were delivered to the container terminal and typhoon struck causing flooding in the
terminal, damaging the cargo
- Parties agreed Df’s standard bill would govern their rights and liability
- Pf claimed for consequent loss and damage
- Relied on FM clause
Held:
- FM clause applied as reasonable steps had been taken
- Nothing in the history of the region indicates a reasonable probability of a flood
- Although practicable to rearrange the containers, there was no reasonable foreseeability
of flood, when flood became a real possibility it was too late

Party relying on FM clause need not take impossible or commercially impracticable steps
China Resources (S) Pte Ltd v Magenta Resources (S) Pte Ltd [1997] 1 SLR(R) 103
Facts:
- Rp contracted Ap to sell urea and furnished performance bond in favour of Ap
- Rp could not deliver in time and gave notice to invoke FM clause due to political situation
in Russia, and stated a latest delivery date
- Ap agreed, but reserved rights to sue, subsequently made claim
- Rp claimed Ap was in repudiatory breach and sued
Held:
- Ap in repudiatory breach
- Ap said Rp could have overcome FM event by obtaining urea from an Eastern European
port
- Such an arrangement is equally impossible as the original as it is too great a risk to ship
without insurance and too much for Rp to take out an insurance

Party seeking to rely on FM clause bears the burden of bringing themselves within it
Metropolitan Water Board v Dick, Kerr & Co [1918] AC 119
Facts:
- As per above
- Df claimed frustration but Pf relied on FM clause which provided that in delay, Df can
apply to engineer for extension
Held:
- FM clause only construed to cover temporary difficulties not fundamental changes

RDC Concrete Pte Ltd v Sato Kogyo (S) Pte Ltd [2007] 4 SLR 413
Held:
- Although contract became more onerous for Df, circumstances did not constitute FM
event within contract
- Df did not take reasonable steps to avoid operation of FM clause causing themselves to be
brought within the clause
- Party relying the clause must show the courts that nothing it could have done to avoid
operation of the FM clause or mitigate its results

FM clauses require very factual inquiries

Holcim (Singapore) Pte Ltd v Precise Development Pte Ltd [2011] 2 SLR 106
Facts:
- Ap contracted to supply concrete to Rp, but unable to supply due to Indonesian sand ban,
and offered to continue to supply only if price increase
Held:
 - Literal performance still possible but commercially impracticable, non-frustrating event
can still come within FM clause
- To bring themselves within FM clause, Ap had to show there were no reasonable steps
then could have taken to avoid or mitigate the event or its consequences
- Ap had taken reasonable steps by asking Rp for help in procuring sand from gahmen
stockpile, but was ignored by Rp

Effects of frustration in statute

Frustrated Contracts Act

Section 2 of FCA, specifically section 2(3) and section 2(4)

Recovery for partial performance conferring valuable benefit

BP Exploration Co (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783
Facts:
- Df own oil concession over land in Libya but did not have resources to find and harvest
- Agreed to share concession with Pf if Pf would explore and harvest
- Oil found but Libya gahmen forfeited concession
- Contract frustrated Pf claimed against Df on s2(3) of FCA for exploratory services
Held:
- Step 1, identify and valuation of Df’s benefit
- In this case benefit is the end product of the service
- In the case where end product is destroyed, award is kosong as value of benefit is kosong
- Value is to be assessed after frustrating event
- Step 2, award of just sum
- Cannot be greater than amount of valuable benefit
- Purpose of FCA is to prevent unjust enrichment
- Amount that is just is what the trial judge thinks is just, appeal judge cannot interfere with
the assessment of just sum, unless it is plainly wrong it cannot be just.