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First Principles of Business Law |
| Performance and breach of contract |
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6. Risk and Frustration |
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6.3. Frustration of a contract |
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Read the facts and the question and then choose the best answer. A is the owner of a fleet of trucks. He agrees to transport, for a period of a year, all the goods produced by B's factory in Victoria to a retailer in Queensland. The price for this service is to be calculated by a formula based on the volume of the goods carried each month. When contracting with B, A says: 'The price I am quoting assumes that the price of motor fuel will only fluctuate within historical limits.' B answers: 'I understand that.' But two months after the contract is made, an unusually severe storm in Europe damages a large number of oil refineries and the world price of motor fuel increases substantially over historical levels. A can get fuel, but he will only be able to perform his agreement with B at a very substantial loss. Does A remain bound by his contract with B in these new circumstances? |
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