South Australian Current Acts

FRUSTRATED CONTRACTS ACT 1988 - SECT 7

7—Adjustment of losses on frustration of contract

        (1)         Where a contract is frustrated, there will be an adjustment between the parties so that no party is unfairly advantaged or disadvantaged in consequence of the frustration.

        (2)         Subject to this section, for the purposes of the adjustment referred to in subsection (1)—

            (a)         the value of contractual benefits received up to the date of frustration by each party to the contract will be assessed as at the date of frustration and those values aggregated;

            (b)         the value of the contractual performance, up to the date of frustration, of each party to the contract will be calculated and those values aggregated;

            (c)         the aggregate amount arrived at under paragraph (b) will be subtracted from the aggregate amount arrived at under paragraph (a), and the remainder notionally divided between the parties in equal shares;

            (d)         an adjustment will be made between the parties so that there is an equalisation of the contractual return of each at the figure attributed under paragraph (c).

        (3)         Where the contractual performance of a party to a contract is referable to a number of separate contracts, the value of that contractual performance will, for the purposes of this section, be apportioned between the various contracts in such proportions as may be just.

        (4)         Where, in the opinion of a court, there is, in the circumstances of a particular case, a more equitable basis for making the adjustment referred to in subsection (1) than the one set out in subsection (2), the court may make an adjustment on that basis rather than on the basis of subsection (2).

        (5)         For the purpose of giving effect to an adjustment under this section, a court may make orders for—

            (a)         the payment of money (including interest);

            (b)         the disposition, sale or realisation of property;

            (c)         the creation of a charge on property;

            (d)         the appointment and powers of a receiver;

            (e)         any incidental or ancillary matter.

        (6)         Where—

            (a)         a party to a contract purportedly performs a contractual obligation, or an act preparatory to the performance of a contractual obligation, after frustration of the contract; but

            (b)         the party did not know, and could not reasonably be expected to have known, that the contract had been frustrated,

the value of the performance (and of any consequent contractual benefits) will be brought into account for the purposes of an adjustment under this section as if it had occurred before frustration of the contract.

        (7)         Where two or more persons are jointly parties to a contract in the same capacity, those parties will be grouped together and treated as a single party to the contract for the purposes of this section.