Contracts: Frustrating contracts!

In Atwal and others v Rochester, Mr Rochester was a builder.  He entered into a contract with Mr and Mrs Atwal in July 2006 to provide building services. He started work in August 2006, but then in April 2007 he suffered a heart attack.  Mr Rochester was unable to return to work and the work was not completed. The contract entered into by the parties did not provide for what should happen in these circumstances. Mr and Mrs Atwal argued that Mr Rochester was in repudiatory breach of the contract and sought damages. 

The High Court held that as the work was to be personally performed by Mr Rochester, the fact that Mr Rochester was seriously ill and unable to complete the job, meant that the contract was frustrated.  Therefore, Mr Rochester was not in repudiatory breach and was able to claim damages from the Atwals under the Law Reform (Frustrated Contracts) Act 1943, for a just sum for the work performed.

Although this case arose from a construction contract, the decision could have implications for companies entering into contracts with sole traders or contractors.  Clear provision should be made in the contract setting out the parties’ rights and obligations where the contractor is prevented from working as well as the steps that the parties must take to remedy the situation.