ExpertMedium2 marksMultiple Choice
ACCA · Question 23 · The law of obligations
Section A
In contract law, what is the effect of a 'frustrating event' on a validly formed contract?
Section A
In contract law, what is the effect of a 'frustrating event' on a validly formed contract?
Answer options:
A.
It makes the contract voidable at the option of the disadvantaged party.
B.
It automatically discharges the contract, releasing both parties from future obligations.
C.
It suspends the contract until the frustrating event has passed.
D.
It requires the party who cannot perform to pay damages for breach of contract.
How to approach this question
Understand the legal consequence of frustration. Does it pause the contract, end it, or cause a breach?
Full Answer
B.It automatically discharges the contract, releasing both parties from future obligations.✓ Correct
When a contract is frustrated (e.g., by impossibility, illegality, or radical change in circumstances), it is automatically discharged. Both parties are released from their future obligations under the contract. The Law Reform (Frustrated Contracts) Act 1943 deals with the apportionment of losses incurred prior to the frustrating event.
Common mistakes
Thinking frustration makes a contract void ab initio (from the beginning) rather than discharging future obligations.
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