Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
Contract; performance; frustration; risk of changed circumstances.
Facts: Davis agreed to build 78 houses, within eight months, for the Fareham Urban District Council. Because of a shortage of labour and materials, the work took longer and cost £17,000 more than expected. Davis wanted the council to pay the increased costs.
Issue: Was performance of the original contract frustrated by the shortage of labour and materials?
Decision: Performance was not frustrated.
Reason: Disappointed expectations do not mean frustrated contracts. When a contractor undertakes work for a fixed sum, he or she normally takes on the risk of the cost being increased by delay. Frustration only occurs if the delay was caused by a new and unforeseeable factor, and was greater than expected, so that the job became one of a different kind from that contemplated in the original agreement. In this case the delay was not unforeseeable, and the contractor should have made provision in the contract if he had wished to avoid the risk.