LAW REFORM (FRUSTRATED CONTRACTS) ORDINANCE

LAW REFORM (FRUSTRATED CONTRACTS) ORDINANCE

CHAPTER 25.

LAW REFORM (FRUSTRATED CONTRACTS).

To amend the law relating to frustration of contracts.

[18th June, 1948.]

1. This Ordinance may be cited as the Law Reform
(Frustrated Contracts) Ordinance.

2. In this Ordinance-
'court' includes any arbitrator by orbefore whom the
matter falls to be determined.

3. (I) Where a contract governed by law applicable
to the Colony has become impossible of performance or been
otherwise frustrated, and the parties thereto have for that
reason been discharged from the further performance of the
contract, the following provisions of this section shall, sub-
ject to the provisions of section 4, have effect in relation
thereto.

(2) All sums paid or payable to any party in pursuance
of the contract before the time when the parties were so dis-
charged (in this Ordinance referred to as the time of
discharge) shall, in the case of sums so paid, be recoverable
from him as money received by him for the use of the party
by whom the sums were paid, and, in the case of. sums so
payable, cease to be so payable: Provided that, if the party
to whom the sums were so paid or payable incurred expenses
before the time of discharge in, or for the purpose of, the
performance of the contract, the court may, if it considers it
just to do so having regard to all the circumstances of the
case, allow him to retain or, as the case may be, recover the
whole or any part of the sums so paid or payable, not being
an amount in excess of the expenses so incurred.

(3) Where any party to the contract has, by reason of
anything done by any other party thereto in, or for the pur-
pose of, the performance of the contract, obtained a valuable
benefit (other than a payment of money to which the last
foregoing subsection applies) before the time of discharge,
there shall be recoverable from him by the said other party
such sum (if any), not exceeding the value of the said benefit
to the party obtaining it, as the court considers just, having





regard to all the circumstances of the case and, in parti-
cular-
(a)the amount of any expenses incurred before the
time of discharge by. the benefited patty in, or for
the purpose of the performance of the contract,
including any sums paid or payable by him to any
other party in pursuance of the contract and retained
.or recoverable by that party under the last foregoing
subsection ; and
(b)the effect, in relation to the said benefit, of the
circumstances giving rise to the frustration of the
contract.

(4) In estimating, for the purposes of the foregoing
provisions of this section, the amount of any expenses
incurred by any party to the contract, the court may, without
prejudice to the generality of the said provisions, include
such sum as appears to be reasonable in respect of overhead
expenses and in respect of any work or services performed
personally by the said party.
(5) In considering whether any sum ought to be re-
covered or retained under the foregoing provisions of this
section by any party to the contract, the court shall not take
into accotint any sums which have, by reason of the circum-
stances giving rise to the frustration. of the contract, become
payable to that party under any contract of insurance unless
there was an obligation to insure imposed by an express
term of the frustrated contract or by or under any enactment.

(6) Where any person has assumed obligations under
the contract in consideration of the conferring of a benefit
by any other party to the contract upon any other person,
whether a party to the contract ot not, the court may, if in
all the circumstances of the case it considers it just to do
so, treat for the purposes of subsection (3) of this section
any benefit so conferred as a benefit obtained by the person
who has assumed the obligations as aforesaid.

4. (1) This Ordinance shall save as is hereinafter
provided apply to contracts whether made before or after the
commencement of this Ordinance, as respects which the time
of discharge is on or after the 8th day of December, 1941,
but not to contracts as respects which the time of discharge
is before the said date.





(2) This Ordinance shall apply to contracts to which
the Crown is a party in like manner as to contracts between
subjects.
(3) Where any contract to which this Ordinance applies
contains any provision which, upon the true construction of
the contract, is intended to have effect in the event of circum-
stances arising which operate, or would but for the said
provision operate, to frustrate the contract, or is intended to
have effect whether such circumstances arise or not, the court
shall give effect to the said provision and shall only give
effect to the foregoing section of this Ordinance to such
extent, if any, as appears to the court to be consistent with
the said provision.
(4) Where it appears to the court that a part of any
contract to which this Ordinance applies can properly be
severed from the remainder of the contract, being a part
wholly performed before the time of discharge, or so per-
formed except for the payment in respect of that part of the
contract of sums which are or can be ascertained under the
contract, the court shall treat that part of the contract as if
it were a separate contract and had not been frustrated and
shall treat the foregoing section of this Ordinance as only
applicable to the remainder of that contract.
(5) This Ordinance shall not apply-
(a)to any charterparty, except a time charterparty or
a charterparty by way of demise, or to any contract
(other than a charterparty) for the carriage of goods
by sea; or
(b)to any contract of insurance, save as is provided
by subsection (5) of the foregoing section ; or
(c)to any contract to which section 9 of the Sale of
Goods Ordinance, (which avoids contracts-for the
sale of specific goods which perish before the risk
has passed to the buyer) applies, or to any other
contract for the sale, or for the sale and delivery,
of specific goods, where the contract is frustrated by
reason of the fact that the goods have perished.


5. Nothing in this Ordinance shall affect any settle-
ment or agreement between the parties subsequent to the
date of discharge whereby the rights and liabilities of the
contracting parties fell to be determined otherwise than in
accordance with the provisions of this Ordinance.
Originally 26 of 1948. Short title. Interpretation. Adjustment of rights and liabilities of parties to frustrated contracts. [s. 3 cont.] Provision as to the application of this Ordinance. (Cap. 26). Saving for settlement or contrary agreement.

Originally 26 of 1948. Short title. Interpretation. Adjustment of rights and liabilities of parties to frustrated contracts. [s. 3 cont.] Provision as to the application of this Ordinance. (Cap. 26). Saving for settlement or contrary agreement.

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