Law of Frustration of Contract

Running head: BUSINESS LAW
BUSINESS LAW
Name of the Student
Name of the University
Author Note

1BUSINESS LAW
1. The buyer of the painting is not obliged to pay the contracted price after what
happened because though the fall of the hammer on the buyer’s quoted price created a
valid contract, but the destruction of the subject matter ceased the obligation of the
buyer to pay for the painting. According to the rule underlying in 'doctrine of
frustration,' the performance of a contract becomes impossible either for one party or
both the parties due to the destruction of the subject matter (Pawlowski and Brown).
In the case of Taylor v Caldwell, the court held that, to claim frustration of a contract
either party needs to prove that at the time of making the contract they did not agree
regarding the risk or loss of such contract, that there has been a drastic change in the
obligation of the contract and the change has happened due to the act of another party.
In the present case, the buyer can take defence of all these points as it is relevant to
his case. Therefore, in this case, the buyer need not pay anything as he was contracted
to pay for the whole picture but not for the shredded one.
2. It can be seen from the facts of the case that that Banksy purposely shredded the
painting after the fall of the hammer in auction for reason best known to him. While
considering his right over payment and the buyer’s obligation to make payment, it can
be said that the rule of doctrine of frustration regarding destruction of the subject
matter by either of the parties conduct, is applied in this case (Som). In the case of J.
Lauritzen A.S. v Wijsmuller B.V, the court held that, where one party is at fault for
frustrating the contract and caused impossibility in the performance of another party,
then the loss suffering party can cease the contract based on the doctrine of frustration
and further claim damages. Furthermore, in the case of DGM Commodities
Corporation v Sea Metropolitan, the court held that to establish the fault of the party,
need to be an element of breach of contract or negligence, it can just be a positive

2BUSINESS LAW
action from the party or an individual whom the party is responsible for. Therefore,
the owner of the painting is not liable to get payment for the painting due to his fault.
3. Though the painting of the famous painter Banksy is said to worth more after it being
shredded as per the speculation of the art experts but it will not create any impact on
the legal obligation of the buyer and seller as the subject matter of the contract which
is the painting, in this case, is said to be destroyed due to the act of the painter
Banksy. Furthermore, the buyer expected the subject matter of the contract that is the
painting to be in existence at the time of contract, which eventually got destroyed
(Appleby v Myers). Therefore, according to the rule of contract law, the contract is
ceased and no party is obliged to perform their part of the contract.
4. Response 1:
 Well, in the article, "Girl With Balloon' Sells For 1.4M Before Self
Destructing", states that, "whether the Banksy painting's final bidder is
expected to pay "as is" for the painting is unclear". I don't agree with because
if it were me I wouldn't pay for it because of what happened to the painting.
For the price that it was sold for I don't think I would pay that much maybe at
a half price, but that's just me.
I agree with this view, as the final bidder did not contract for a shredded
picture but for a complete one. Therefore, he is not required to perform his part in
the contract. However, if he agrees to pay partial or half of the amount then it is
upon his own discreertion.
 I mean if the owner had already paid for it, the painting belongs to him now
and it's now in his hands. However, if the painting owner did the damages I
think the buyer should not be entitled to any damages because he bought it not

3BUSINESS LAW
knowing that there were any damages done to the painting. So, I don't think
the buyer should pay for any damages. Though other's might disagree, but
that's how I see it.
The owner could have made liable for parti.al payment if he had
incurred monetary liability for the painting on the event of frustration.
However, in the present case, he himself caused frustration to the contract.
Hence, not liable for payment
 Well, that will make a big impact on both the seller's and the buyer's if the
painting value is worth more now. Because the artist himself is known for his
subversive art. The article, "We Just Got Banksy-ed": "Girl With Balloon'
Sells For 1.4M Self Destructing", states, "Banksy is known for his subversive
public art installations and graffiti murals". So, maybe self destructing his
painting was part of it art.
I cannot agree with this statement as in legal parlance there is no value
for this statement.
Response 2: The buyer should not pay for the contracted price. The agreement was that the
buyer was going to buy the intact painting. The seller purposefully destroys
the painting and technically breaching the contract that had been made that
he was going to sell an undamaged painting. I believe the buyer has no
obligation of paying for the damaged painting.
I agree with this view that the buyer has no obligation to pay for the
damaged painting and further that the owner purposely destroyed the same

4BUSINESS LAW
which held him liable for breach of contract and causing frustration to the
contract.
 He purposefully decides to not follow the contract by damaging the painting.
I agree with this view and this makes the buyer entitled to claim
damages from the owner.
 The buyer and the seller should do another negotiation to form another
contract on behalf of the shredded painting.
I agree with this. In such a case buyer will have a transparent view
about the subject matter and he can decide whether to proceed with the
contract or not. But this will clearly specify the recession of the prior contract.

5BUSINESS LAW
Reference:
Appleby v Myers (1867) LR 2 CP 65.
DGM Commodities Corporation v Sea Metropolitan SA [2012] EWHC 1984 (Comm)
J. Lauritzen A.S. v Wijsmuller B.V [1990] 1 Lloyd’s Rep
Pawlowski, Mark, and James Brown. "The termination of real property interests by
frustration under English law." Nottingham LJ 27 (2018): 46.
Som, Eric M. "Does the Law of Frustration of Contract Lack Any Principled
Justification?." Available at SSRN 3072165 (2017).
Taylor v Caldwell(1863) 3 B & S 826