Examine how frustration of a contract makes a subsisting contract before it occurrence void or void ab initio?

Frustration of a contract occurs when an unforeseen event renders the performance of the contract impossible, illegal, or radically different from what was originally agreed upon. In such cases, the contract may become void or void ab initio, depending on the circumstances.

If the frustration of the contract occurs before the contract has come into existence or before any obligations have been performed, the contract is considered void ab initio. This means that the contract is treated as though it never existed, and neither party is bound by its terms.

On the other hand, if the frustration of the contract occurs after the contract has already been formed and some obligations have been performed, the contract may be considered void. In this case, the parties are released from their obligations under the contract, and any payments or benefits already exchanged may need to be returned.

It is important to note that frustration of a contract is a complex legal concept and the specific circumstances of each case will determine whether the contract is void or void ab initio. It is advisable to seek legal advice if you believe that a contract has been frustrated and you are unsure of the implications for the contract.

Frustration of a Contract

Frustration of a contract occurs when an unforeseen event renders the performance of a contract impossible, impracticable, or fundamentally different from what was contemplated by the parties. In such cases, the contract is discharged by law, and the parties are excused from their obligations.

Effect of Frustration on Contract

The effect of frustration on an existing contract depends on the nature of the event and the consequences it creates:

1. Void Ab Initio:

If the frustrating event occurs before the contract is fully performed, the contract is considered void ab initio (from the beginning). This means that the contract is treated as if it never existed, and the parties are discharged from their obligations retrospectively.

2. Voidable:

If the frustrating event occurs after the contract is partially performed, the contract is voidable. This means that the innocent party (the party not responsible for the frustration) can choose to rescind (cancel) the contract and recover damages for the work already performed. However, if the innocent party chooses not to rescind, the contract remains valid, but the terms may be adjusted to reflect the altered circumstances.

Conditions for Frustration:

For frustration to apply, certain conditions must be met:

- Unforeseeability: The frustrating event must not have been reasonably foreseeable by the parties at the time of contracting.
- Substantial Change: The event must have changed the nature of the contract to such an extent that it becomes impossible, impracticable, or radically different from what was intended.
- No Fault of Parties: The parties must not be responsible for the frustrating event.

Examples of Frustration:

- A contract for the sale of a crop that is destroyed by a natural disaster.
- A contract for the construction of a building that becomes impossible due to a change in building regulations.
- A contract for the purchase of goods that are unavailable due to an embargo.

Consequences of Frustration:

If a contract is discharged due to frustration:

- The parties are excused from their obligations under the contract.
- Any payments or performances made before frustration will be reversed or adjusted as appropriate.
- Neither party can sue the other for breach of contract.