You are acting for a commercial client, Scavengers Ltd, which specialises in offshore treasure hunting and in the exploration and preservation of historical artefacts and shipwrecks.

Scavengers Ltd

You are acting for a commercial client, Scavengers Ltd, which specialises in offshore treasure hunting and in the exploration and preservation of historical artefacts and shipwrecks. 

In January Scavengers agreed to hire a barge, ‘The Titan’, from Oceanics for the month of June at a cost of £150,000. Payment was to be made in three instalments: £10,000 immediately, a further £70,000 on 1 June and the final £70,000 on 1 July. Oceanics had agreed to make certain alterations to the barge to meet Scavengers’ specifications. 

The barge was to be used, in a widely publicised operation, to lift the wreck and any artefacts of a very famous ship which lay at the bottom of the Thames. The barge sank on 8 June after a number of artefacts, worth approximately £100,000, had been recovered and brought safely to shore, but before the lift of the wreck itself had begun. As it was the only vessel capable of lifting the wreck, the whole project had to be abandoned. Scavengers had paid the first instalment, but not the other two. 

Oceanics had made the specified alterations at a cost to them of £12,000. 

Scavangers has received a letter from Oceanics claiming £140,000 (representing the total amount of the instalments that Scavengers should have paid on 1 June and 15 July). 

Advise Scavengers, explaining its legal position, if the barge sank in a hurricane. 

DOCUMENT A

Suggested approach for problem questions involving frustration 

Identify the contracting parties.

State the general rule (Paradine v Jane)

Identify any party who might try and claim that the contract has been frustrated in order to avoid liability for breach.

Define frustration.

Go through each part of the definition. Does it apply to the facts? Give authority for what you say.

If contract is frustrated state the effects at common law.

Does the Law Reform (FC) Act 1943 apply? If so consider:

section 1(2) and

section 1(3) of the Act

and apply to the facts.

8. If contract may not be frustrated then (if relevant) discuss innocent party’s remedies for breach of contract.