Law Reform (Frustrated Contracts) Act 1943
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| Long title | An Act to amend the law relating to the frustration of contracts |
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| Citation | 1943 c. 40 |
| Territorial extent | United Kingdom |
| Dates | |
| Royal assent | 5 August 1943 |
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Status: Current legislation
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| Text of the Law Reform (Frustrated Contracts) Act 1943 as in force today (including any amendments) within the United Kingdom, from legislation.gov.uk | |
The Law Reform (Frustrated Contracts) Act 1943 is an Act of the Parliament of the United Kingdom which establishes the rights and liabilities of parties involved in frustrated contracts. It amends previous common law rules on the complete or partial return of pre-payments, where a contract is deemed to be frustrated, as well as introducing a concept that valuable benefits - other than financial benefits - may also be returned.
In English contract law, a contract which is found to be frustrated will halt all performance of duties thereafter, and end all contractual obligations. Such a result could bring about inequitable results for parties making pre-payments or deposits. An example can be found in the case of Chandler v Webster. Mr Webster contracted to rent a room to Mr Chandler, for the purpose of witnessing Edward VII's coronation, with the understanding that the money for the room would be paid before the procession. Mr Chandler paid £100 prior to the procession, and subsequently the King fell ill. The Court of Appeal not only struck out Mr Chandler's claim to recover the pre-payment, but that Mr Webster was entitled to the remainder of the balance (£41 15s). This common law position was not improved upon until Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd, where the House of Lords, overruling Chandler v Webster, decided that pre-payments could be recoverable where that had been a 'total failure' of consideration from the recipient of such a payment (where nothing had been given in return for the payment, prior to the frustrating event).
This result was unsatisfactory however, in that the common law could still produce inequitable results in several instances. For example, where there had indeed been some form of consideration given in return for a pre-payment, or even a complete payment, none would be recoverable following a frustrating event. This principle is exemplified in Whincup v Hughes, where Brett J explained the common law position:
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