First Principles of Business Law
Performance and breach of contract

6. Risk and Frustration

6.4. Deliberate acts that cause frustration

 

 

 

Read the facts and the question and then choose the best answer.

In June, A, a shipowner, agrees to charter his ship, the Toorola, to B, a coal mining company, to carry coal from Australia to Japan. After the contract is made, A orders the Toorola to sail to Australia to collect the cargo. Halfway across the ocean the ship begins to leak. Unfortunately A has not properly maintained the ship's pumps and after a few hours they fail. The Toorola sinks. A tells B he can no longer perform their contract.

Should B accept that, in these circumstances, performance of the contract has become frustrated?

(a) Yes. If the ship has sunk, the contract cannot be performed and it is therefore frustrated.

(b) No. It was A's fault that the pumps failed to work and in these circumstances A cannot rely on frustration to avoid liability under the contract.

 

 

 

 

 

 

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