Frustrating Delay
| Published date | 01 November 1983 |
| DOI | http://doi.org/10.1111/j.1468-2230.1983.tb02548.x |
| Date | 01 November 1983 |
| Author | J. E. Stannard |
FRUSTRATING DELAY
THE
aim of this article is to consider the effects of a long delay in
performance on
a
party's obligations under a contract. Such a delay
can have serious consequences. The performance may become more
onerous. In times of inflation, extra expense
will
almost certainly be
incurred. A party will have to wait longer to get what he contracted for.
Other contracts may be affected; delay may have a
"
knock-on
"
effect. Markets mlay be lost. And where the price is fixed, a party may
make a very serious
loss
on the contract.
So
it is hardly surprising that
a party often seeks to be discharged from his obligation to perform on
account of a protracted delay. When can he do this? Despite
a
recent
spate
of
cases in this area, including three decisions of the House of
Lords,l the law
is
not at all clear.
We are not concerned here with cases where the party seeking to be
discharged (let
us
call him
P)
has had the foresight to stipulate a time
for performance by the other side, that time being of the essence. In
that case
P
need not wait beyond the set day.2 The main problem
arises when time
is
not of the e~sence,~
or
where no time at all has been
fixed for performance,
or
where
P
is prejudiced by inordinate delay
in rendering his own performance. In these cases
P
is
only discharged
if the delay has bleen
or
will be
so
long as to
"
frustrate
''
the ~ontract.~
It is at this point, when we come up against the notion of frustration,
that our difficullies really begin.
As
long ago as 1958 the complaint
was made that the doctrine of frustration of contract had always been a
source of joy to1 the academic lawyer and
a
corresponding cause of
confusion to the practising lawyer.6 The writer was referring
to
the
plethora of judicial opinions on the
"
basis
"
of the doctrine, but he
could equally well have been complaining about the fearsome difficulties
involved
in
its zpplication. For instance, what
is
the difference, if any,
between
"
frustr(ation
"
and
"
frustrating breach
"?
When is frustration
self-induced? What do we mean when we say a contract that has been
frustrated comes to an end?
Is
frustration invariably automatic?
Is
it
just a defence, or can it provide an independent cause of action? These
The Nema (Pioneer Shipping
v.
BTP Tioxide)
I19811
2
Lloyd's Rep. 239;
The Evia
(No.
2)
(Kodros Shipping Corp.
v.
Empreso Cubana de Fletes)
119821 2
Lloyd's
Rep. 301;
The Hannah Blunienthal (Paul Wilson and
Co.
AIS
v.
Parteareederei Hannah Blumenthal)
(19831
1
Lloyd's Rep. 103.
Parkin
v.
Thondd
(1852) 16 Beav. 59;
Unifed Scientific Holdings
v.
Burnley
B.C.
[1977] 2 W.L.R. 806.
And has not been made
of
the essence by notice: see Anson,
Law
of
Contracf
(25th
ed.) p. 490,
Sfickney
v.
Keeble
[19151 A.C. 386, 415.
This principle applies mainly
to
charterparties
(Hong Kong Fir Shipping
Co.
Ltd.
v.
Kawasaki Kisen Ka,isha Lrd.
[I9621
2
Q.B.
26)
but
also applies elsewhere;
e.g.
building
contracts
(Price
v.
Milner
[I9681
E.G.D.
234;
Worig Lai Ching
V.
Chinachem
(1979) 13
Build. L.R. 86); contracts
of
employment
(Marshall
v.
Harland and W01.f
(19721 I.C.R.
101); sale
of
goods
(Kidsfon
v.
Monceau Ironworks
(1902)
7
Com.Cas. 82);
hire (Ditchburn
huipmenf
v.
Crich
(1966)
I10
S.J.
266); arbitration agreements
(The Hannah Blunienthal
[I9831
1
Lloyd's
Rep.
103).
See Hiller (1958) 2 Sydney
L.R.
571.
738
Nov.
19831
FRUSTRATING
DELAY
739
and other questions have puzzled generations of law students. It
is
the
purpose of this article to suggest that
a
lot of these difficulties are simply
due to faulty analysis and an excessive devotion to conceptualism, and
that
a
lot of the difficulties would disappear
if
a more coherent analysis
were adopted.
It
will
also be asked how far the courts are precluded
from adopting such an analysis. We shall begin by looking at the
traditional analysis of frustrating delay, and at some of the criticisms
which can be and have been levelled at it.
1.
THE
TRADITIONAL ANALYSIS
OF
FRUSTRATING
DELAY
The principal feature of this analysis is the fundamental distinction
drawn between frustrating breach and the doctrine of frustration.
So
fundamental
is
this distinction that the topics are generally found
in
different chapters of the standard textbooks;
“
frustration
”
generally
has a chapter to itself, whereas
“
frustrating breach
”
will
be dealt with
in
the chapter on Discharge by Performance
or
Discharge by Breach.
In a case of frustrating breach,
P
(the party seeking discharge) may treat
the other party’s breach as a repudiation and
“
terminate
”
the contract.
This means that
P
need no longer perform his own obligations and can
claim damages. On the other hand
P
may
“
affirm
”
the contract and
insist on the other party performing. Thus a frustrating delay can be a
repudiation.s But frustrating delay can also amount
to
frustration of
the contract under
“
the doctrine of frustration.” In this case
P
may
or
may not be discharged from his obligations depending on who was at
fault. If the delay is the other party’s fault
or
neither party’s fault, the
contract
will
automatically
be
at an end and
P
is discharged. But
if
the delay is P’s own fault the frustration
will
be
“
self-induced
’’
and
P
cannot rely on it as discharging him.7 And
if
both parties are at fault it
seems that neither can be discharged and that both
will
be held to their
obligations no matter how long the delay.*
It is hardly surprising that this is one of the most difficult areas in the
whole
law
of contract. We have an avalanche of technical terms;
frustration, frustrating breach, repudiation, termination, discharge.
And even the ordinary words used are not clear; what is meant by
“
fault
”
and when is frustration
“
self-induced
”?
Quite apart from
this, there are a number of criticisms that can be and have been levelled
at this traditional analysis.
(a)
The Dividing Line Between
Repudiation and Frustration
Under the traditional doctrine it
is
difficult
if
not impossible to say
where repudiation ends and frustration begins. Does a repudiatory
delay require
a
breach
or
will
some other failure to perform suffice?
Take the well-known case of
Poussard
v.
spier^.^
Here, it
will
be
remembered, the defendant employed the plaintiff to sing in an opera.
Owing to illness she was unable to be present at the opening night
or
f~
Hong
Kong
Fir
case
[1962]
2
Q.B.
26.
’
Maritime National Fish
v.
Ocean Trawlers
119351
A.C.
524.
The Hannah Blumenthal(1983]
1
Lloyd’s
Rep.
103.
’
(1876)
I
Q.B.D.
410.
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