- 8 Marks
Question
Chief Wadada, a very prosperous trader, recently completed the construction of a mansion in his village and intends to have the house-warming ceremony on New Year’s day. He contracted Exclusive Décor Enterprises to do the interior decoration of the mansion, which must be completed not later than a week before the house-warming.
Exclusive Décor Enterprises moved all the required materials to site on schedule, but a heavy rainstorm ravaged the whole village, flooded the mansion, and destroyed all the materials on site. The decoration could no longer be done until after the New Year’s day when the flood would have receded. Chief Wadada canceled the contract and refused to pay the contract sum demanded by Exclusive Décor Enterprises, who intends to make a claim in court for the payment of the contract sum.
Required:
Advise Exclusive Décor Enterprises, stating the legal issues involved. (8 Marks)
Answer
The legal issues involved in this scenario center around the doctrine of frustration in contract law, which discharges a contract when an unforeseen event occurs, making the performance of the contract impossible or radically different from what was agreed upon.
- Frustration of Contract: The rainstorm and flood were unforeseen events that were beyond the control of both parties. These natural events destroyed the materials and made it impossible for Exclusive Décor Enterprises to complete the interior decoration before the agreed-upon date. Under the doctrine of frustration, the contract is discharged, meaning that both parties are excused from further performance of their obligations without fault.
- Liability for Payment: Since the contract has been frustrated, Exclusive Décor Enterprises cannot claim the full contract sum, as they were unable to complete the work due to circumstances beyond their control. However, they may be entitled to recover reasonable expenses incurred before the frustration, such as the cost of materials and labor already provided before the rainstorm, under the principle of restitution.
Advice:
Exclusive Décor Enterprises may have a valid claim for reimbursement of reasonable costs incurred before the frustration of the contract, but they are unlikely to succeed in claiming the full contract sum, as the contract was discharged due to frustration. It is advisable for them to pursue a claim for compensation based on the expenses already incurred rather than the full payment of the contract.
- Tags: Contract Law, Frustration, Natural events, Performance of contract
- Level: Level 1
- Topic: Law of Contract
- Series: NOV 2019
- Uploader: Dotse