Q1

Frustration in contract law arises from unforeseen and uncontrollable events for which neither
party is responsible1. The contract is terminated from the date of frustration. The Law
Reform (Frustrated Contracts) Act of 19432 governs the legal implications and allocation
of losses. If frustration does not apply, the affected party may seek recourse through an action
for breach of contract. Gaston will be advised on the potential termination of three contracts
and the implications regarding deposits and outstanding payments.

Termination of contracts.

To advise Gaston on potential contract termination based on frustration, the key criterion is
determining whether the frustrating event renders the contract impossible to perform, illegal,
or fundamentally altered.
In Contract 1, Gaston should consider the concept of supervening "impossibility" of further
performance when evaluating the potential termination of the contract with Picasso Le
Poodle. This assessment draws parallels with the legal precedent set in the case of Taylor v
Caldwell3, where an unforeseen event leading to the destruction of the subject matter of the
contract absolved the parties from their contractual obligations. In this instance, the subject
matter, which involved the unique painting "Storming the Bastille" by Bichon Frise,
necessary for fulfilling the contract, was destroyed in a catastrophic fire (an external
occurrence) at Picasso's studio. Furthermore, Section 7 of the Sale of Goods Act 1979 4
establishes that ‘perishing of specific goods before risk transfer voids the agreement’.
Consequently, the contract may be considered frustrated, leading to its discharge.

In Contract 2, Gaston should consider the concept of supervening "illegality" of further

performance when determining the potential termination of the contract with Les Bonbons
Du Dog. This analysis draws parallels with the legal precedent established in Denny, Mott,
and Dickinson Ltd v James B. Fraser & Co. Ltd5, where the introduction of timber control
regulations during the war frustrated a contract for timber supply, rendering it impermissible
for one of the parties to seek termination. Similarly, Contract 2 was frustrated due to the UK
government's prohibition on the production of French Candy. As a result, enforcing and
continuing with the performance of the contract would have been unlawful. Consequently, the
contract would be discharged from that point, and all contractual obligations would come to
an end.

In Contract 3, Gaston should take into account the concepts of supervening "radically
1
Lord Justice Griffiths: The Hannah Blumenthal [1983] 1 AC 854: 882.
2
Law Reform (Frustrated Contracts) Act 1943 (LR (FC) A 1943).
3
Taylor v Caldwell [1863] 3 B S 826.
4
Section 7 of the Sale of Goods Act 1979.
5
Denny, Mott and Dickinson Ltd v James B. Fraser & Co. Ltd [1944] 1 ALL ER 678.
different" circumstances or "impossibility" of further performance when assessing the
potential termination of the contract with Canine Coiffure. This analysis finds relevance in
the legal precedent established in Krell v Henry6, where rooms were hired to view the
coronation procession of Edward VII, which was subsequently cancelled due to the King's
illness and surgery. The court held that the contract of hire was frustrated, as the viewing of
the procession was deemed the "foundation of the contract" for both parties. Similarly, in
Contract 3, the fundamental purpose of the agreement revolves around pampering Monsieurr
Oui-Oui with Canine Coiffure's exceptional care and stylish transformations, which can be
considered the "foundation of the contract" for both parties. Therefore, the contract may be
deemed frustrated, as the essential purpose became unattainable due to the labor strike,
making further performance impossible. However, it is essential to acknowledge certain
limitations to the application of frustration in the context mentioned above. A contract cannot
be considered frustrated merely due to an event that renders it more burdensome for one party
to perform.

In determining frustration, Gaston should also consider whether the frustrating event was
foreseeable by the parties or at least by one of the parties and if no provision was made to
address such an event in the contract. An illustrative case is Davis Contractors Ltd v
Fareham Urban District Council7, where a shortage of labor and materials was foreseeable.
However, since there was no explicit contractual provision, such as a force majeure clause,
the contractors assumed the risk associated with the situation. Similarly, in the present case, a
sudden labor strike leading to severe understaffing at Canine Coiffure might have been
foreseeable, as it would result in the enterprise becoming unprofitable. Despite the lack of an
explicit contractual provision addressing this situation, the consequences resemble the
outcome in Gold Group Properties Ltd v BDW Trading Ltd8, which highlights the restricted
application of the frustration doctrine in instances where performance becomes more arduous,
expensive or onerous rather than fundamentally altered.

Gaston should also consider whether the frustrating event is attributable to one party's fault or
a deliberate choice made by both parties. In The Super Servant Two9 case, the contract
allowed for performance by either SS1 or SS2. The defendants' decision to allocate work to
SS2 and assign SS1 to other contracts resulted in the sinking of SS2. The court ruled that
frustration could not automatically terminate the contract because it was due to the
defendants' choice. Likewise, in Contract 3, Gaston should consider that Canine Coiffure's
choice to cancel the contract might not stem from impossibility or radical alteration but rather
from a profitability perspective. Hence, the mere existence of an option to proceed with the
available staff or potentially hire additional staff could be argued as self-induced frustration.

In summary, while Contract 3 could be subject to contention, as there is still potential room
for performance, Contracts 1 and 2 may be terminated on grounds of frustration due to their
alignment with the doctrine of supervening frustration.

Effect on deposit and outstanding payments.

6
Krell v Henry [1903] 2 KB 740.
7
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696.
8
Gold Group Properties Ltd v BDW Trading Ltd [2010] BLR 235.
9
J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd’s Rep 1.
The common law principle of frustration does not void the entire contract. Instead, it
automatically discharges the contract, releasing both parties from future obligations.
However, any obligations that arose before the frustrating event remain binding. Gaston
should note that the Common Law remains applicable when the Law Reform (Frustrated
Contracts) Act10 is not relevant.

As illustrated in the case of Chandler v Webster11, wherein Chandler rented a room to observe
the coronation procession and paid £1000 of the £141 rental fee, the procession did not occur
due to the King's illness. The court ruled that neither party could claim money from the other,
including the non-refundable deposit or the balance of the hire fee. This application of the
common law principle confirms that in cases of frustrated contracts, the loss is allocated
where it falls.

However, it is essential to note that the common law rules have been modified by the Law
Reform (Frustrated Contracts) Act 194312, specifically in Section 1(2)13. According to this
act, prima facie, the party making an advance payment is entitled to recover that payment. In
Contract 1, Gaston need not be concerned about the courts exercising their discretion to allow
the payee (Picasso Le Poodle, in this instance) to retain a portion of the advance payment.
The reason being, there is no evidence suggesting that Picasso Le Poodle incurred any
expenses before the contract's discharge, and therefore, the advance payment would be
recoverable by Gaston.

In Contract 2, the principles of Chandler v Webster14 (partial failure) would have applied if
there had not been a complete failure of consideration. An illustrative case is Fibrosa SA v
Fairbairn Lawson Combe Barbour Ltd15(total failure), where a goods contract was frustrated
due to a change in the law making it illegal to trade with occupied Poland during World War
II. Frustration occurs when a contract becomes impossible to perform due to a change in the
law rendering it illegal. Similarly, in Contract 2, the ban on the production of French candy
by the UK government renders any production by Les Bonbons Du Dog illegal. Within the
context of applying the Common Law, Gaston would be entitled to receive his deposit of
£10,000. Additionally, following the principle established in Appleby v Myers16, all future
obligations are discharged, and thus, any additional payment of £10,000 to be made by
Gaston upon successful delivery can be recovered, as no payment could be retained by the
contractor unless the work was completed.

However, it is crucial to consider Section 1(2) of the Law Reform (Frustrated Contracts)
Act 194317, which states that money paid before the frustrating event is recoverable, and
money payable before the frustrating event ceases to be payable, regardless of whether there
has been a total failure of consideration. In line with this, Gaston would have the right to
recover the deposit and any amount payable before the frustrating event occurred.

10
LR (FC) A 1943.
11
Chandler v Webster [1904] 1 KB 493.
12
LR (FC) A 1943.
13
LR (FC) A 1943, s 1(2).
14
Chandler v Webster [1904] 1 KB 493.
15
Fibrosa Spolka Akyjna v Fairburn Lawson Combe Barbour Ltd [1943] AC 32.
16
Appleby v Myers [1867] LR CP 651.
17
LR (FC) A 1943, s 1(2).
In concluding Contract 2, Gaston should be mindful that despite the possibility of recovering
financial losses under Section 1(2) of the Law Reform (Frustrated Contracts) Act 194318,
there remains the potential for a deduction of a just sum at the court's discretion to cover any
reliance expenditure incurred by the other party. This principle is demonstrated in the case of
Gamerco SA v ICM/Fair warning (Agency) Ltd19. Section 1(3)20 of the Act also allows for the
awarding of a just sum to account for any valuable benefit that survives the frustrating event,
as seen in BP Exploration Co. (Libya) Ltd v Hunt21. The determination of any financial award
is subject to the court's discretion and can, to some extent, be influenced by fortuitous
circumstances. Such uncertainties can be avoided through prudent contractual planning.

Word Count: 1517

Q2

In contract law, there are two types of mistakes: mutual and unilateral. Unilateral mistake
18
LR (FC) A 1943, s 1(2).
19
Gamerco SA v ICM/Fair warning (Agency) Ltd [1995] 1 WLR 1226.
20
LR (FC) A 1943, s 1(3).
21
BP Exploration Co. (Libya) Ltd v Hunt [1979] 1 WLR 783.
occurs when one party is mistaken about a contract term, and the other party is aware of the
mistake but cannot exploit it, as in Shogun Finance Ltd v Hudson.22

In this scenario, Kevin, a charismatic car salesman, unintentionally sold a car to an imposter
named Papadum Paul using a counterfeit name and cancelled cheque. He also encountered a
unilateral mistake when selling a Dodo pattern to Basmati Bindi, who pretended to be actress
Kareena Kapoor. The advice will address void for unilateral mistake, potential recovery
options, finance arrangements, and face-to-face meeting implications.

Void for Unilateral Mistake and Recovery.

In Hartog v Colin & Shields23, the defendant mistakenly offered to sell hare skins at a price
per pound instead of per piece. The plaintiffs accepted the offer, but the court held that the
contract was void. The negotiations were based on a price per piece, the customary trade
practice, and the plaintiffs must have known about the defendant's mistake at the time of
acceptance. Likewise, in the scenario involving the imposter, it could be argued that the
individual intentionally manipulated the situation to gain a £5,000 profit advantage over an
enthusiastic car collector, Kevin. This interaction occurred subsequent to a cheque
cancellation for £75,000. One might contend that such a minor difference in price could not
be deemed a fundamental mistake leading to the voiding of the contract. However, this
interpretation may be disputed based on the degree of intentionality and profit-seeking
behaviour displayed by the imposter during the negotiation process

In face-to-face contracting, Kevin may consider applying a presumption that the mistaken
party intends to engage directly with the person physically present during negotiations,
which, in this case, is the imposter (Rogue). This presumption is supported by the legal
precedent set in Lewis v Averay24, where a car was sold to a fraudulent individual posing as
an actor. Although the contract could potentially be voidable due to misrepresentation, it was
not void for mistake. The innocent third party who acquired the car in good faith was entitled
to retain ownership, and the plaintiff could not retroactively avoid the contract. The
application of this presumption may influence the outcome of Kevin's situation when dealing
with the imposter.

Similarly, Kevin unknowingly sold a car to an imposter (Papadum Paul) who used a fake
name and cancelled cheque. Before discovering the fraud, the car had been sold to an
innocent third party (Biryani Bondi) in good faith. Therefore, following this precedent, it may
be expected that Kevin might be unable to recover his possession from the third party as the
contract appears voidable but not void between Ken and the imposter (Sir Vindaloo) because
when considering the recoverability of any goods (Rolls Royce Phantom II) that may be in a
third-party possession (Biryani Bondi), these mistakes are treated as attribute mistakes
relating to the decision to allow the rogue to have possession of the goods on credit. The
contract therefore becomes voidable and this protects the innocent third part purchaser who
acquires the goods from the rogue.

However, considering the extent of effort and engagement that Kevin put forth in entertaining
captivating tales, offering a test drive, and presenting a sales talk with the imposter posing as
'Sir Vindaloo' and 'Kareena Kapoor', it may be argued that Kevin's intention was to deal
22
Shogun Finance Ltd v Hudson [2004] 1 AC 919.
23
Hartog v Colin & Shields [1939] 3 All ER 566.
24
Lewis v Averay [1972] 1 QB 198.
exclusively with the individuals he believed them to be. Moreover, Kevin's extra efforts in
providing a picture of 'Bebo' (Kareena Kapoor) for verification and agreeing to meet in
person further reinforce this notion. This suggests that there is a possibility to seek an
outcome where the contract is considered void for mistake. A relevant case to consider is
Ingram v Little25, where the sellers of a car sold it to a rogue who provided his name and
address. Initially, the sellers refused payment by cheque but later agreed to accept it after
authenticating the name and address provided. The rogue subsequently sold the car to Mr.
Little. The court ruled that the contract was void for mistake as, by verifying the details
provided, the sellers demonstrated an intention to deal solely with Mr. Hutchinson at the
stated address.

However, it is important to note that the case of Ingram v Little26 might not hold significant
weight following the controversial decision in Shogun Finance v Hudson27. The latter case
has not been widely followed since its judgment. Consequently, within the framework of
unilateral precedent, the contract may not be deemed void if the claimant intended to contract
with the person who made the offer. The mistake, in the context of Kevin's situation, could be
argued to pertain to the offeror's attributes or creditworthiness, rather than identity. Therefore,
relying solely on the precedent of Ingram v Little28, may not be a viable approach for Kevin's
case.

In the event that Kevin intends to invoke the rogue status of Bobi and Paul as a ground for
mistake as to identity, it is crucial to recognize that this type of mistake will render the
contract void only if it is considered fundamental. If the mistake is not deemed fundamental,
then the contract will be voidable, meaning it can be set aside, on the grounds of fraudulent
misrepresentation. Mistake as to identity occurs when one party is mistaken regarding the
identity of the other contracting party (which is a term of the contract), and the other party is
aware of this mistake, typically because they have fraudulently misrepresented their identity.

Ken should be attentive to the significance of the distinction between void and voidable
contracts, especially concerning situations where the goods have been sold by the rogue
(Bobi and Paul) to an innocent third party. If the contract with the rogue is deemed void, it
means the contract was invalid from the outset, and the rogue had no rightful ownership
(Title) to transfer the goods to the innocent third party. Consequently, in such cases, the goods
can be recovered from the innocent third party since the rogue's ownership was never
legitimate.

On the other hand, if the contract with the rogue is only voidable due to fraudulent
misrepresentation, the right to set aside the contract is lost once an innocent third party
acquires rights in the goods. In such circumstances, the innocent party can retain possession
of the goods since their acquisition occurred in good faith, and the rogue's misrepresentation
would not automatically render the contract void. Therefore, understanding the distinction
between void and voidable contracts is crucial when determining the recovery of goods from
an innocent third party in cases involving rogue sellers.

25
Ingram v Little [1960] 3 ALL ER 332.
26
Ibid.
27
Shogun Finance Ltd v Hudson [2004] 1 AC 919.
28
Ingram (n 25).
Finance Arrangement with a Finance Company.

If Paul had purchased the car using a finance arrangement with a finance company, Kevin, as
a charismatic salesman, could emphasize his original intention to contract with a person other
than Paul, with whom the contract was executed. Demonstrating this intention becomes
instrumental in upholding the legal precedent of Cundy v Lindsay29. As per this precedent, the
contract may be deemed void if the claimant is mistaken concerning the identity of the other
contracting party. It is essential to note that the mistake in question should generally pertain
to the identity of the party involved and not their attributes.

Despite Kevin's efforts, he may still face a disadvantage because for the contract to be void
for mistake as to identity, there must be two existing entities involved in the transaction. In
contract law, an offer can only be made to, and accepted by, an existing entity. In Kings
Norton Metal Co. Ltd v Edridge, Merrett & Co. Ltd30, it was established that having one
entity with two names, one being false, is insufficient for a contract to be void for mistake.
The case involved an order received from 'Hallman & Co.' on false letterhead. Although no
such company existed, the court ruled that the plaintiffs intended to deal with the actual
writer of the letter, not mistaking one person for another. Hence, a contract existed between
the plaintiffs and the rogue, which was not void for mistake. Similarly, in Kevin's situation,
there may be a lack of ascertainable association or means to fact check the imposter judge,
which could be detrimental to his position. Moreover, the absence of a written or virtual
contract, which ideally should be available on the online shop platform, weakens the strength
of legal contentions in favour of Kevin to establish the contract as void rather than voidable.
The absence of concrete evidence could hinder Kevin's ability to successfully circumvent the
situation in his favor, leading to a potential contract being deemed voidable instead of void.

Generally, individuals are legally bound by signed documents (finance arrangements with a
finance company), even if they haven't read or understood them (L'estrange v Graucob31). An
exception applies if the signature resulted from fraudulent misrepresentation of the
document's nature (Lloyds Bank v Waterhouse32). However, signatories, including Kevin, still
have a duty to exercise reasonable care before signing (Saunders v Anglia Building Society33).

Effect of Face-to-Face Meeting.

If Kevin's interaction with Bebo (Kareena Kapoor) never occurred face-to-face, the nature of
the contract would change. It would now be classified as a contract made inter absentes,
meaning that both parties, Bebo and Kevin, would not be physically present during the
contract formation process. In such a scenario, the legal precedent of Shogun v Hudson34
becomes relevant. This case upheld that a finance contract was void because Mr. Patel was
the customer named in the written agreement, and his signature had been forged. Drawing a
parallel, Kevin may have a favourable outcome if the contract is considered void, as Kareena
Kapoor's name, signature, address, and account details should have been accurately
represented in the online receipt, instead of potentially being subject to forgery or
misrepresentation.
29
Cundy v Lindsay [1878] 3 App Cas 459.
30
Kings Norton Metal Co. Ltd v Edridge, Merrett & Co. Ltd [1897] 14 TLR 98.
31
L'estrange v Graucob [1934] 2 KB 394.
32
Lloyds Bank v Waterhouse [1993] 2 FLR 97.
33
Saunders v Anglia Building Society [1970] UKHL 5.
34
Shogun Finance Ltd v Hudson [2004] 1 AC 919.
Word Count: 1640

Bibliography

Primary Sources
Cases

 BP Exploration Co. (Libya) Ltd v Hunt [1979] 1 WLR 783.

 Chandler v Webster [1904] 1 KB 493.
 Cundy v Lindsay [1878] 3 App Cas 459.
 Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696.
 Denny, Mott and Dickinson Ltd v James B. Fraser & Co. Ltd [1944] 1 ALL ER 678.
 Fibrosa Spolka Akyjna v Fairburn Lawson Combe Barbour Ltd [1943] AC 32.
 Gamerco SA v ICM/Fair warning (Agency) Ltd [1995] 1 WLR 1226.
 Gold Group Properties Ltd v BDW Trading Ltd [2010] BLR 235.
 Hartog v Colin & Shields [1939] 3 All ER 566.
 Ingram v Little [1960] 3 ALL ER 332.
 J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd’s Rep 1.
 Kings Norton Metal Co. Ltd v Edridge, Merrett & Co. Ltd [1897] 14 TLR 98.
 Krell v Henry [1903] 2 KB 740.
 L'estrange v Graucob [1934] 2 KB 394.
 Lewis v Averay [1972] 1 QB 198.
 Lloyds Bank v Waterhouse [1993] 2 FLR 97.
 Saunders v Anglia Building Society [1970] UKHL 5.
 Taylor v Caldwell [1863] 3 B S 826.

Statutes and Statutory Instruments

 Law Reform (Frustrated Contracts) Act 1943.

 Section 7 of the Sale of Goods Act 1979.

Secondary Sources

Books

 Lord Justice Griffiths: The Hannah Blumenthal [1983] 1 AC 854: 882.