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It was held that although the route via the cape

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It was held that although the route via the Cape would have involved a change in the methodof performance of the contract than that originally contemplated by the parties, it was not sucha fundamental change as to entitle the appellant sellers to say that the contract was frustrated.Limitations on the doctrine of frustration[11.440]1.The contract itself covers the eventthe parties make specific provision for the event in the contract– by, for instance, agreeing that theobligation to perform is “absolute” or by inserting a force majeure clause that covers the event– thiswill prevent the contract being frustrated.Claude Neon Ltd v Hardie[11.450]Claude Neon Ltd v Hardie[1970] Qd R 93. The parties signed afive-year contractthat contained a clause that said that if Hardie’s leasehold interest in the property was “extin-guished or transferred”, Neon would become immediately entitled to the remaining rent.Two years later, the owner of the premises took possession of the premises and demolishedthem. Neon claimed the rent to which it was entitled under its contract with Hardie. Hardieargued that the owner’s action in going back into possession of the property had frustratedthe contract.The Court decided the contract was not frustrated because the parties had foreseen the event(the owner re-taking possession) and had made provision for it in the contract.[11.460]2.The frustrating event must not have been one that the parties could reasonably have foreseenA frustrating event must not have been foreseen or must not have been reasonably foreseeable bythe parties. If it were foreseeable, the courts presume that the parties have allocated the risk of the22_Chapter_11.indd19414-Dec-181:09:08 AM
chapter 11Termination and Breach of a Contract195event occurring in the contract. This limitation is not as easy as it may appear. For instance, it is notclear how foreseeable the event needs to be, nor is it clear how foreseeable the effects of the eventneed to be. It is not, for example, difficult to say that hurricanes are a foreseeable event in the Gulfof Mexico. It is another matter to say that the particular damage wrought on the north-east coastof the USA by Hurricane Sandy in 2012 was foreseeable.3.Fault or self-induced frustrationThe frustrating event (or its effect) must not have been caused by the acts or omissions of the partyseeking to rely on the frustration. The reason for this limitation is that a party should not be able toplead frustration in respect of an event that he or she could have prevented. For example, a contractfor the carriage of goods may not be frustrated by the sinking of the vessel if the sinking was causedby the negligence of the shipper of the goods:J Lauritzen AS v Wijsmuller BV[1990] 1 Lloyds Rep1. Again, the eruption of hostilities in and around a port may not allow the captain of a cruise linerto plead frustration if he or she deliberately allowed the vessel to sail into the port knowing that thelikelihood of hostilities erupting was high.

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Law, Co Ltd, Australian Competition and Consumer Commission, Australian Competition and Consumer Commission v Baxter Healthcare, Coles Supermarkets Australia

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