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Contract question - frustration - case scenario

Discussion in 'Contract Law' started by oodya, Dec 5, 2011.

  1. oodya New law student

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    Quick question regarding frustration of contracts. I am offering accomodation (and taking bookings) from my website for an event on behalf of other accomodation providers. I have set up 2 contracts, one between me and the customer and the other between me and the accomodation provider. I also take a 20% booking fee for this and the accomodation has to be paid for in advance. If for whatever reason the events cannot go ahead (i.e. due to earthquake, fire, flooding, terrorists etc), where would I stand with regards to refunding the money back? I am presuming that this would fall under frustration of contract? What would happen to the booking fee? Can I claim expenses before refunding? Also, what about the accomodation provider - what is their stance with refunding money back to me?
    I am just wondering what peoples thoughts are on this and also if there are any cases that I can refer to?
    Thanks.
    oodya, Dec 5, 2011
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  2. Molineux Super Moderator

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    Apply Law Reform Frustrated Contract Act 1943
    Molineux, Dec 7, 2011
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  3. oodya New law student

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    Thanks for the above response. I have read some details about the above law. I understand that if monies are paid in advance, it has to be refunded. One question I have is that if I charged £36 for accommodation (room at £30 + £6 booking fee), and paid the accommodation provider £30, what would have to be refunded to me and what would I have to refund back to the customer. Am I right in thinking that the accommodation provider will refund me the full money back and I would refund £30 back to the customer? I would claim the £6 as expenses?

    Many thanks.
    oodya, Dec 10, 2011
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  4. Molineux Super Moderator

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    LECTURE NOTES
    Under common law, frustration merely discharges the parties from their future obligations. If a contract is frustrated it is automatically discharged at common law. It is not open to the parties to decide that the contract should continue.
    Frustration discharges the contract prospectively. This means that the parties are excused from their future obligations but not from the obligations that existed prior to the time of the frustrating event. Often this can lead to one party being unjustly enriched at the expense of the other. The Law Reform Frustrated Contract Act 1943 is to prevent unjust enrichment.
    Molineux, Dec 10, 2011
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