Lowther Ltd hires a conference centre for a three-day trade fair. A week before the event, through no fault of either party, the centre is badly flooded and cannot be used for months. What is the most likely legal effect on the contract?

Correct answer: D) The contract is frustrated and both parties are discharged from further obligations

Explanation

A contract is frustrated where, without the fault of either party, a supervening event makes performance impossible or radically different from what was agreed. Destruction of the subject matter is the classic example, here the venue being unusable. Both parties are discharged from future obligations, and money paid before the event may be dealt with under the Law Reform (Frustrated Contracts) Act 1943. There is no breach, and the court will not rewrite the contract for new dates.