Oxford BA: Discharge & Remedies Exam Paper

Alpha Ltd contracted to supply 10,000 widgets to Beta Corp by 31st March 2024 for £50,000. On 15th March, Alpha's factory was severely damaged by flooding, making delivery impossible by the deadline. Alpha offered to deliver by 30th April instead. Beta rejected this, arguing they needed the widgets for a product launch on 1st April, and immediately sourced alternative widgets from Gamma Inc for £70,000. Meanwhile, the market price for widgets had risen to £8 per unit (from the original £5). Alpha claims the flooding constitutes frustration and they owe no damages. Beta seeks £20,000 damages representing the additional cost and lost profits of £15,000 from the delayed launch. On 25th March, it emerged that Alpha could have sourced widgets from their sister company Delta Ltd, though this would have cost an additional £10,000. Advise the parties on their respective liabilities and remedies.

Critically evaluate the extent to which the doctrine of frustration has developed beyond its original impossibility-based foundations to encompass broader notions of justice and fairness in contractual relationships. Consider whether this evolution represents principled development or unprincipled judicial activism.

Creative Solutions Ltd agreed to design and install a bespoke computer system for Retail Corp's flagship store for £200,000, completion by 1st June 2024. The contract contained a liquidated damages clause specifying £1,000 per day for late completion. Creative delivered on 20th June, 19 days late. However, the system contained significant defects: the inventory management module failed completely, and the payment processing was unreliable, causing customer complaints and requiring temporary manual systems. Retail spent £30,000 on emergency IT consultants and suffered lost sales of approximately £50,000 during the three-week repair period. Creative argues the liquidated damages clause covers all delay-related losses, and that Retail should have mitigated by accepting Creative's offer (made on 25th June) to fix defects immediately rather than hiring external consultants. Retail claims the system was so defective it constitutes total failure of consideration, entitling them to reject it entirely and claim full restitutionary recovery plus consequential losses. Evaluate the remedial positions and likely damages recoverable.

To what extent has the development of the Law Reform (Frustrated Contracts) Act 1943 successfully addressed the harshness of the common law position regarding frustrated contracts? Consider whether the Act strikes an appropriate balance between restitution and loss allocation, and evaluate proposals for reform.