LAW

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Davis Contractors Ltd v Fareham Urban District Council (1956) HL
This case concerns the doctrine of frustration of contract. The core issue is whether unforeseen circumstances, specifically a significant delay caused by a labour shortage, relieved the contractors (Davis Contractors) of their contractual obligations to build houses for the council.
I. Facts:
  • Contract: Davis Contractors agreed to build 78 houses for Fareham Urban District Council within eight months for £85,836.
  • Delay: Due to a shortage of skilled labour, the project was delayed by 14 months (22 months total).
  • Claim: Davis Contractors claimed the delay frustrated the contract, entitling them to payment on a quantum meruit basis (reasonable value of services rendered) rather than the original contract price.
II. Legal Issue: Did the unforeseen delay frustrate the contract, thus discharging both parties from further performance?
III. Holding: The House of Lords held that the contract was not frustrated.
IV. Reasoning:
  • No Radical Change: The court emphasized that while the contract became more onerous (difficult and costly) due to the delay, the essential nature of the contractors' obligations remained unchanged. They still had to build the same houses. The delay, though significant, didn't transform the contract into something fundamentally different.
  • Allocation of Risk: The court considered that the risk of delays, such as the one experienced, was inherent in the type of contract and should have been anticipated and accounted for by Davis Contractors. They implicitly accepted this risk when entering into the agreement.
  • Criticism of the "Implied Term" Approach: Both Lord Reid and Lord Radcliffe criticized the approach of analyzing frustration by implying a term into the contract. They argued this was unnecessary and potentially misleading.
V. Key Judgements:
  • Lord Reid: Frustration depends on the "true construction" of the contract's terms, considering the nature of the contract and surrounding circumstances at the time it was made. The question is whether the contract, as written, is applicable to the new situation. If not, it's at an end. Focus is on the original contract's scope.
  • Lord Radcliffe: Frustration occurs when, without fault of either party, a contractual obligation becomes impossible to perform because the changed circumstances render performance radically different from what was originally undertaken. His Latin phrase, "Non haec foedera veni," translates to "This is not what I promised to do," highlighting the fundamental change required for frustration.
VI. Key Concepts:
  • Frustration of Contract: A doctrine allowing discharge of a contract when unforeseen events render performance impossible or radically different from what was agreed upon, without fault of either party.
  • Quantum Meruit: A claim for payment based on the reasonable value of services rendered, often used when a contract is terminated before completion.
  • Implied Term: A term not explicitly stated in the contract but considered to be included based on the context and intentions of the parties.
VII. Study Questions:
  1. What were the key facts in Davis Contractors v Fareham Urban District Council?
  2. Why did the court reject the contractors' claim of frustration?
  3. Explain the difference between the approaches of Lord Reid and Lord Radcliffe to the doctrine of frustration.
  4. What is the significance of Lord Radcliffe's Latin quote?
  5. How does this case illustrate the importance of risk allocation in contract law?
  6. What are the limitations of applying the "implied term" approach to frustration?
This study guide provides a structured overview of the case. Remember to review the original case text to gain a deeper understanding. Focus on understanding the different approaches to defining frustration and the implications for contract interpretation.



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