New South Wales Consolidated Acts

FRUSTRATED CONTRACTS ACT 1978 - SECT 11

11 Adjustment where part performance only received

(1) In this section:

"attributable cost" , in relation to performance received under a frustrated contract, means:

(a) where there is no incidental gain to the performing party, and except as provided by paragraph (c)--an amount equal to the reasonable cost of the performance,

(b) where there is an incidental gain to the performing party, and except as provided by paragraph (c)--such part of the reasonable cost of the performance as is equal to an amount calculated by deducting from the reasonable cost of the performance the value of that incidental gain, or

(c) where the amount referred to in paragraph (a) or (b) exceeds the proportionate allowance for the performance--such part of the reasonable cost of the performance as is equal in amount to that proportionate allowance.

"attributable value" , in relation to performance received under a frustrated contract, means an amount equal to the value of the proportionate allowance for that performance reduced by the lost value of that performance.

"incidental gain" , in relation to a party to a contract who suffers a detriment referred to in the definition of "reasonable cost", means any property or improvement to property acquired or derived by that party as a consequence of doing or suffering the acts or things that caused that party to suffer the detriment, except to the extent that the property or improvement so acquired or derived is comprised in any performance given by that party under the contract or is expended or disposed of in giving any such performance.

"lost value" , in relation to performance received under a frustrated contract, is a reference to the amount (if any) by which the value of that performance was reduced by reason of the frustration of the contract, that value being assessed as at the time immediately before the frustration of the contract and on the basis that the contract would not be frustrated.

"proportionate allowance" , in relation to performance received under a frustrated contract, means such part of the value of the agreed return for complete performance of the contract by the performing party as is appropriate to be charged to the other party for the performance received, having regard to the extent to which the performance received is less than the whole of the performance contracted to be given by the performing party.

"reasonable cost" , in relation to performance received under a frustrated contract, is an amount that would be fair compensation to the performing party for any detriment suffered by that party in reasonably paying money, doing work or doing or suffering any other act or thing to the extent to which the detriment was suffered for the purpose of giving the performance so received.

(2) Where a contract is frustrated and part, but not the whole, of the performance to be given by a party under the contract has been received before the time of frustration, the performing party shall be paid by the other party to the contract:

(a) an amount equal to the attributable value of the performance, except where the attributable cost of the performance exceeds its attributable value, or

(b) where the attributable cost of the performance exceeds its attributable value--an amount equal to the sum of:

(i) the attributable value of the performance, and

(ii) one-half of the amount by which the attributable cost of the performance exceeds its attributable value.