Davis Contractors v Fareham UDC [1956] UKHL 3, AC 696
Citation:Davis Contractors v Fareham UDC [1956] UKHL 3, AC 696
Rule of thumb: .
Background facts:
The facts of this case were that Davis agreed to build around 8 houses for a fixed price. The actual building of the houses became more difficult due to a lack of skilled labour, fluctuations in the price of material and the project being more difficult and much less profitable than first imagined due to the land layout. Davis sought an increase on the grounds of frustration but Fareham refused so the matter went to Court.
Judgment:
The Court held that this did not constitute frustration as there was no new and unforeseeable event, meaning that they were only due to the original price. A change of economic conditions is not deemed to be a material change in societal circumstances – the contract had become less profitable but not frustrated.
Ratio-decidendi:
‘In my view, the proper approach to this case is to take ... all facts which throw light on the nature of the contract, or which can properly be held to be extrinsic evidence relevant to assist in its construction and then, as a matter of law, to construe the contract and to determine whether the ultimate situation ... is or is not within the scope of the contract so construed ... appears to me that frustration depends, at least in most cases, not on adding any implied term but on the true construction of the terms which are, in the contract, read in light of the nature of the contract and of the relevant surrounding circumstances when the contract was made’, Lord Reid, ‘There is, however, no uncertainty as to the materials upon which the court must proceed ... [On the "officious bystander" test] it might seem that the parties themselves have become so far disembodied spirits that their actual persons should be allowed to rest in peace. In their place there rises the figure of the fair and reasonable man. And the spokesman of the fair and reasonable man, who represents after all no more than the anthropomorphic conception of justice, is, and must be, the court itself. So, perhaps, it would be simpler to say at the outset that frustration occurs whenever the law recognises that, without the default of either party, a contractual obligation has become incapable of being performed because the circumstance in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni. It was not this that I promised to do’, Lord Radcliffe
'not ... radically different', Lord Radcliffe
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