Contractual Impossibility and Risk: Frustration and Common Mistake

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  • Created by: phoebs.b
  • Created on: 23-04-18 12:33

Metropolitan Water Board v **** Kerr & Company Ltd (1918) - contractual provision allowed an engineer to grant an extension of time in relation to contract to build a reservoir in six years if the contractor had been 'unduly delayed or impeded' by 'any difficulties, impediments or obstructions whatsoever and howsoever occasioned'. This did not cover a government prohibition on construction of the reservoir as a consequence of the First World War. In dismissing an appeal by the claimant, the House of Lords held that, because the illegality and the delay consequent on it were indefinite, the contract had ceased to be binding (and that, although there was a clause - condition 32 - expressly dealing with delay caused by difficulties, it did not cover delay of this kind). 

William Sindall plc v Cambridgeshire County Council (1994) - the Court of Appeal held that the contract allocated the risk of a sewer on development land to the purchaser. The purchaser could not avoid the contract and recover the purchase price by relying on a mistake as to the existence of the sewer. 

McRae v Commonwealth Disposals Commission (1951) - the sale of a wreck of an oil tanker stated to be at a specified location. The seller impliedly promised that the wreck was located there. Its absence was a breach of contract, entitling the purchaser to obtain damages.

Couturier v Hastie (1856) - the seller sold corn, believed to be in transit, to the buyer. Unknown to both, the corn had been sold en route as a result of it beginning to ferment. The House of Lords held that since the contract was for the sale of existing goods and they did not exist at the time of sale, the contract was void and the buyer was not liable to pay for the corn. Res extincta: unknown to both parties the subject matter of the contract had ceased to exist by the time they made the contract so the contract may be void for initial impossibility. This proposition can now be seen in s6 Sale of Goods Act 1979, where there is a contract for the sale of specific goods, and the goods without the knowledge of the seller have perished at the time when the contract is made, the contract is void. 

Cooper v Phibbs (1867) - a nephew leased a fishery from his uncle. His uncle died. When the lease came up for renewal the nephew renewed the lease from his aunt. It later transpired that the uncle had given the nephew a life tenancy in his will. The lease was held to be voidable for mistake as the nephew already had a beneficial ownership right in the fishery. This is an instance of res sua. Normally where a contract is found to have been entered under a common mistake the contract will be rendered void as opposed to voidable. The lease was held to be voidable rather than void as the claim was based on equity as…

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