Memorandum for contract law

In writing this memorandum bearing in mind that you are a man of great intelligence I shall attempt to refresh your memory on the area of law in regards to this contract. As you have rightly identified the main area of law in Rebecca's case is that of frustration and breach of the contract. The first part of the memorandum is going to deal with the aspect of whether the contract was frustrated and then the second part will deal with whether there was breach of the contract.

To establish whether the contract between Rebecca and the Committee leasing out the village hall we need to identify how the contract started and whether a contract actually existed between the two parties. As with all contract law cases there is need to identify that all components are available for a contract to be formed. It is quite clear from the case that Rebecca and the Committee had entered a legally binding contract, since Rebecca is a professional it shows the seriousness of her intention.

The discussion between the parties was based on a commercial agreement. The advertisement for the village hall was an invitation to treat Fisher v Bell1 which was waiting to be accepted by Rebecca. The contract was formed through the acceptance of the invitation to treat as laid out in Patridge v. Crittenden2, this therefore resulted in Rebecca getting the 1year lease. Since the contract is in place focus is now going to be placed on whether the contract was frustrated.

To refresh your memory, the doctrine of frustration holds out that the contract is discharged following unforeseen events after the contract has been entered into without fault of either party. Frustration discharges the parties from further contractual performance since the whole contract is rendered illegal, further performance of any contractual obligations is made impossible and radical changes in the circumstances means that the obligations are made different to what the parties agreed to on formation.

It was previously thought that the doctrine of frustration could not apply to leases but the case of National Carriers v. Panalpina (Northern) Ltd3 changed this. The House of Lords accepted that leases can be frustrated; it was held that as a matter of principle leases could be frustrated but they admitted that as a matter of practice the courts would be reluctant to conclude that a lease has been frustrated. In the Panalpina case the lease was for 99years but this decision also applies to short term contracts thus this paves way for Rebecca to frustrate the contract.

In this case there was a fire in the hall which mainly affected the office and there was smoke damage to the main hall. One of the main cases under the doctrine of frustration is that of Taylor v. Caldwell 4 where there was the hire of a musical for a concert and the concert hall was destroyed by fire 6days prior to the contract starting. The courts held that it was an implied term within the contract that the hall should exist for the contract to go ahead.

The same can be applied to Rebecca's case, since the main hall was damaged by smoke it would be impossible for her to carry out her normal contractual obligations under the contract. The hall comes to the essence of the contract therefore with damage to it; it means that the contract is not serving the purpose which it should therefore Rebecca may have a claim under the doctrine of frustration. The argument that might be used by the defence is that damage to the essential parts of the contract was temporary and minimal therefore this is not adequate for her to claim under frustration.

Partial destruction of the subject matter may result in the contract being frustrated if it hinders performance of the contract5 , in Rebecca's case although the fire mainly damaged the office and the hall suffered smoke damage this meant that normal performance under the contract was impossible. In Taylor v. Caldwell the contract was for the hire of the music hall and the Surrey Gardens but only the music hall was destroyed and the courts held the contract had been frustrated as the destruction was not the fault of neither party, the same principle would be applied to Rebecca.

To reinforce this point Rebecca would be able to use the authority of the case of Jackson v. Union Marine Insurance Co. Ltd 6 whereby the courts held that temporary unavailability of the subject matter is adequate to frustrate the contract. Rebecca might also be able to frustrate the contract under impossibility of purpose, she might claim that the fire has undermined the purpose of the contract to her that she should not be required to stay bound in it or pay for the remaining rent. The building was no longer fit for her purpose therefore she could have the right to frustrate the contract on this basis.

However, problems might start to emerge here, as it was held in the House of Lords case of Bunge Corp v. Tradax Export SA 7 that the frustrated purpose of only one party will not frustrate the contract, in this case if Rebecca decides to claim through impossibility of purpose then there would be no common purpose since the frustration only serves her needs and at the same time not considering that of the Committee. As highlighted above there are a number of hindrances to Rebecca frustrating the contract and one of them are that she cannot base the frustration claim that the Committee failed to provide consideration.

In this case she might say that there was total failure of consideration, this normally arises where the claimant has no part of what he had bargained for. From the facts of the case it seems that Rebecca is saying that the hall is no longer suitable for her purposes and therefore she would like to claim for the rent she had paid already and not paying for that of October and until the lease expires. It will not be possible for her to claim for the money she has paid already as at common law any money paid before the frustrating event is lost.

However, the common law approach was superseded by the Law Reform (Frustrated Contracts) Act 19438 which will be discussed later in the memorandum. In regards to the issue of consideration, both parties had fulfilled their consideration towards each other. The courts had fulfilled their consideration by renovating the hall as per Rebecca's request and Rebecca kept to her payments. Consideration is value paid for a promise, this should not always be monetary and one of its principles is that it should be of detriment to the offeree.

In this case both parties had received benefits and losses as a result of the contract therefore the claim for the rent already paid by Rebecca would be unsuccessful as she enjoyed the benefits of using the hall for 5months. Following the rule laid out in Chandler v. Webster9 courts were following the common law approach to frustration whereby it was stated that any losses incurred before the frustrating act are not recoverable. The case of Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd10 replaced the common law rule in Chandler v. Webster and it came backed by the Law Reform (Frustrated Contracts) Act.

This outlined that the party that receives payment is awarded "quantum meruit" which is whereby the party is entitled to recover payment for work performed. If Rebecca claims that the contract is frustrated then the Committee will be able to claim for the total sum of i?? 5,000 which was spent on painting the interior and flooring. However, at the same time Rebecca would not be able to claim under Section 1(2) of the Act since payment of rent is a condition of the lease therefore by claiming it back she would be going back on the terms of the contract.