Law Reform Act (Frustrated Contracts) 1943

Changes to legislation: There are currently no known outstanding effects for the
Law Reform (Frustrated Contracts) Act 1943. (See end of Document for details)
Law Reform (Frustrated

Contracts) Act 1943
1943 CHAPTER 40 6 and 7 Geo 6
An Act to amend the law relating to the frustration of contracts. [5th August 1943]
Modifications etc. (not altering text)

C1 Act applied by Local Government, Planning and Land Act 1980 (c. 65, SIF 81:1), s. 6(4)
C2 Act applied by Local Government Act 1988 (c. 9, SIF 81:1), s. 5(2)
1 Adjustment of rights and liabilities of parties to frustrated contracts.

(1) Where a contract governed by English law 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, subject to the provisions of section two of this Act, 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 discharged (in this Act 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 purpose 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 particular,—
2 Law Reform (Frustrated Contracts) Act 1943 (c. 40)
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(a) the amount of any expenses incurred before the time of discharge by the
benefited party 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 resonable
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 recovered or retained under the foregoing
provisions of this section by any party to the contract, the court shall not take
into account any sums which have, by reason of the circumstances 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 or 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.
2 Provision as to application of this Act.

(1) This Act shall apply to contracts, whether made before or after the commencement of
this Act, as respects which the time of discharge is on or after the first day of July,
nineteen hundred and forty-three, but not to contracts as respects which the time of
discharge is before the said date.
(2) This Act 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 Act applies contains any provision which, upon
the true construction of the contract, is intended to have effect in the event of
circumstances 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 Act 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 Act applies can
properly be severed from the remainder of the contract, being a part wholly performed
before the time of discharge, or so performed 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 Act as only applicable to
the remainder of that contract.
(5) This Act shall not apply—
Law Reform (Frustrated Contracts) Act 1943 (c. 40) 3
(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 [F1section 7 of the Sale of Goods Act 1979](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.
Textual Amendments
F1 Words substituted by Sale of Goods Act 1979 (c. 54, SIF 109:1), ss. 62, 63, Sch. 2 para. 2
Modifications etc. (not altering text)

C3 S. 2(3) excluded by Aircraft and Shipbuilding Industries Act 1977 (c. 3), s. 32(2)
3 Short title and interpretation.

(1) This Act may be cited as the Law Reform (Frustrated Contracts) Act 1943.
(2) In this Act the expression “court” means, in relation to any matter, the court or
arbitrator by or before whom the matter falls to be determined.
4 Law Reform (Frustrated Contracts) Act 1943 (c. 40)
Changes to legislation:
There are currently no known outstanding effects for the Law Reform (Frustrated Contracts) Act
1943.

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Changes to legislation: There are currently no known outstanding effects for the

Law Reform (Frustrated

Modifications etc. (not altering text)

1 Adjustment of rights and liabilities of parties to frustrated contracts.

2 Provision as to application of this Act.

(a) to any charterparty, except a time charterparty or a charterparty by way of

Modifications etc. (not altering text)

3 Short title and interpretation.

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