Chapter 8

Risk of Loss
 Risk of Loss
Chapter 8
Chapter Outline
8-1 Reasons to have a contract set aside:
vitiating factors
8-2 Mistakes in contract law
8-3 Frustration in contract law
8-4 Covid-19 and Frustrated Contracts
 Learning Objectives

1. What are the reasons to have a contract

set aside: vitiating factors?
2. What is mistakes in contract law?
3. What is Frustration of Contract?
4. Covid-19 and Frustrated Contracts?
Mistakes and frustration in contract law
 Mistakes and frustration in contract law
involve circumstances which make a contract
unworkable.
 Mistakes in the drafting of a contract can be one cause of
a dispute or claim –
 Frustration can occur when circumstances change after
the contract is signed, which make the contract
unworkable or unenforceable.
8-1 Mistakes
 If absolutely fundamental, as it gets to the very
heart of the transaction, the contract will be
considered void from the outset
 In contract law, a mistake is an erroneous belief,
at contracting, that certain facts are true. It
can be argued as a defense, and if raised
successfully can lead to the agreement in
question being found void ab initio or voidable,
or alternatively an equitable remedy may be
provided by the courts.
 8-2 Frustration of contract
 Frustration of contract is the general law's method
of allowing parties to be relieved of their legal
obligations.
 It only applies to contracts which have become
impossible to perform.
 A supervening event changes the circumstances of
performance of the contract so significantly, that
the parties no longer need to perform the contract.
 The supervening event terminates the contract.
 8-3 Covid-19 and Frustrated
Contracts
Whether or not a contract has been frustrated by the
Coronavirus depends on:
1. on the type of contract it is
2. the sort of goods or services to be supplied, or the
assets being bought, sold or licensed
3. the precise performance requirements of the parties
under the contract
4. how the supervening event interferes with the parties'
obligations to perform their respective commitments.