It is evident from the facts of the case that Lottie has reserved a sports-based vacation with Adventure
center for March 2015, having made an initial payment of 600 pounds out of the total 1100 pounds.
Unfortunately, two days before Lottie’s planned vacation, the adventure center’s premises were sealed
by inspection authorities due to a food poisoning outbreak. This outbreak turned out to have been
caused by contaminated milk sent by manufacturers which was used in preparing puddings. In light of
these circumstances, Lottie intends to seek compensation, while Adventure Center aims to absolve itself
of contractual obligations by invoking the doctrine of frustration. The central question at hand is whether
the doctrine of frustration can be successfully applied in this case.
In contract law, the foundational principle established under Paradine v Jane stipulates that contractual
obligations are definite and any accountability for intervening events should ideally be covered by
express provisions for them in the contract. However, the rigidity of this rule as elucidated Paradine v
Jane has proven to be notably unjust over time. In response to this perceived injustice, the courts have
developed the doctrine of frustration as a more equitable solution for parties whose inability to fulfill
contractual obligations was unforeseeable and beyond their control. This doctrine serves as a
mechanism to address unforeseen and extreme circumstances, offering a fairer approach to parties
confronted with situations beyond their reasonable anticipation or control. According to National
Carrier Ltd, if a contract is signed and then an unexpected change, not caused by either party, makes it
impossible, illegal, or drastically different from what the parties agreed upon, the contract will be
considered terminated due to frustration. The doctrine is very limited, with the courts focusing not on
the event itself but rather on how the frustrating event impacts the contract's performance. Additionally,
there is no exhaustive list of frustrating events. When determining whether a contract has been
frustrated, the courts employ a 'multifactorial approach,' as established in Edwinton v Tsavliris. In our
case, the authorities have sealed the premises, rendering operations clearly illegal. In addition, the
frustrating event was not the fault of AC (Maritime Fishing case) (The ‘Super Servant Two’), was not
foreseeable (Goldcorp) (Severfield v Duro) and there is no other alternative way to complete
performance and provide the service. Therefore, the proof of frustration is evident, leading to the
discharge of the contract.
The final issue is to determine the remedies which will be available to the parties. Initially the remedies
were set out under common law (Chandler) (Hirji Mulji v Cheong Yeong Steamship) (Fibrosa). However,
the current framework is provided for by the Law Reform (Frustrated Contracts) Act, 1943. In our
specific case, given that Lottie made an advance payment, we will rely on Section 1(2) of the Act. This
section stipulates that future performance is discharged, and if an advance has been made, it must be
returned with a deduction for reasonable expenses incurred in connection with the contract. In our case,
Lottie’s 600 pounds will have to be returned by AC and neither party will not be bound to each other for
any obligation.