LAW 101 Seminar Handout

Week 9
Enforcement of the Contract (+ Ending the Contract)

PART 1

Frustration

1. With reference to the facts and decision in Codelfa Constructions Pty Ltd v SRA (NSW) (1982),
explain the requirements and consequences of a declaration that a contract is frustrated.

Termination

2. With reference to the cases of Associated Newspapers Ltd v Bancks (1951) and Koompahtoo
Local Aboriginal Land Council v Sanpine explain when an actual breach of contract may give rise
to a right to terminate that contract.

Damages

3. Answer the following questions regarding damages:

a. When is a party entitled to damages for breach of contract
b. How are damages assessed?
c. What types of damages are available?
d. What limitations exist in relation to an award of damages? (eg Hadley v Baxendale
(1854) and Brace v Calder [1895] 5 QB 253)

Unenforceable Contracts: Rescission on the grounds of a Vitiating Factor

4. Using case examples, describe the nature of the ‘vitiating factors’ of mistake and duress. What
impact will a finding of mistake or duress have on a contract?

5. Using case examples, describe the nature of the ‘vitiating factors’ of mistake and duress. What
impact will a finding of mistake or duress have on a contract?

1
PART 2

Problem Question: Ending the Contract

(Source -> Des Butler, Contract Law Q&A (5th ed, 2014), 213: Chapter 5, Question 42)

Pre-Prep Pty Ltd caterers have a two-year contract to provide all meals to Solar Airlines Pty Ltd. The
contract provided for Solar to make weekly payments for meals to be delivered.

The contract operated without incident for six months. Then, after a falling out over pay and conditions
Pre-Prep was effectively closed down by a strike by its entire kitchen staff. The main concerns of staff
related to the antiquated condition of the company's premises and the hours they were expected to
work for the money they were paid. Pre-Prep's position was that it was unable to afford renovations and
could not pay higher rates and still be able to fulfil contracts like the Solar one. It claimed that changes
threatened the company's viability.

Solar was displeased with events at Pre-Prep. The strike had stretched to two months when Solar lost
patience with the catering company. It had been forced to its meals from a different catering company
on a week-by-week basis and at a higher cost and decided it was time to find a more permanent
solution. It wrote to Pre-Prep advising that 'due to your inability to fulfill your obligations under the
contract, we are obliged to herewith terminate our arrangement'.

Solar’s displeasure was also evident in that it had deliberately withheld paying the accounts from Pre-
Prep for two weeks preceding the strike.

One day after receiving the letter, Pre-Prep's kitchen staff reduced their demands, and the strike was
resolved within one hour.

Advise Pre-Prep in relation to the contract with Solar.