FLK1 · Contract

Frustration

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

CON.11 Frustration

Core idea. A contract is frustrated when, after formation, something happens — without the fault of either party — that makes performance impossible, illegal, or radically different from what was undertaken. The contract then automatically terminates at the moment of the frustrating event. No election is required; it is not a remedy a party chooses.

The test. The classic formulation (Davis Contractors v Fareham UDC [1956]): frustration occurs only where performance becomes "radically different" from what the parties bargained for. The bar is high — mere increased cost, difficulty or delay is not enough.

Categories (with leading cases):

Impossibility — destruction of the subject matter: Taylor v Caldwell (1863) (music hall burned down); death/incapacity in personal-service contracts.
Illegality (supervening) — performance becomes unlawful, e.g. by outbreak of war: Fibrosa v Fairbairn [1943].
Frustration of common purpose — the event removes the whole point: Krell v Henry [1903] (coronation cancelled). Contrast Herne Bay v Hutton [1903] — purpose only partly defeated, not frustrated.

What does NOT frustrate (common traps):

Self-induced frustration — caused by a party's own choice/breach: no relief (Maritime National Fish v Ocean Trawlers [1935]).
Mere hardship / bad bargain / more expensive performance (Davis Contractors; Tsakiroglou v Noblee Thorl [1962] — Suez closure, alternative route still possible).
Foreseen/foreseeable events, or risks the contract expressly allocates (e.g. a force majeure clause covering the event ousts frustration).
A merely temporary interruption usually does not frustrate (assess against contract length).

Consequences — Law Reform (Frustrated Contracts) Act 1943:

s.1(2): money paid before discharge is recoverable; money payable ceases to be payable. The court may allow the payee to retain/recover expenses incurred, up to the sum paid or payable before discharge (discretionary).
s.1(3): where one party gained a valuable non-money benefit before discharge, the court may order a just sum for it.
1943 Act does not apply to certain contracts (e.g. carriage of goods by sea, insurance, s.7 SGA perished specific goods).

Distinctions to nail: frustration = post-formation event; common mistake = facts wrong at formation. Don't confuse the Davis "radically different" test with breach — frustration is no-fault and automatic.

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In January, a doctor negotiating the sale of his medical practice tells the buyer, truthfully, that the practice generates around £2,000 a month in income. Contracts are not signed until May. Between January and May the doctor falls seriously ill, stops practising, and the patient list collapses, so that by the time of signing the practice earns almost nothing. The doctor says nothing about this change. The buyer, still relying on the January figure, completes the purchase and then discovers the true position.

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Frustration

CON.11 Frustration

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