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3 Law of contract (1 questions)
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The doctrine of frustration discharges a contract when an unforeseen event occurs after formation, rendering performance impossible, illegal, or radically different from what was contemplated.
- Legal test: The event must be beyond the control of either party, not due to fault, and must make the contractual obligations fundamentally different from those originally agreed (see Taylor v Caldwell (1863)).
- Effect: The contract is automatically terminated at the point of frustration; parties are released from future obligations, and any loss is allocated according to the law of restitution.
- Illustrative case: In Taylor v Caldwell, a music hall burned down, making performance impossible. The court held the contract was frustrated, discharging both parties.