Free Law Dissertations - If This Is An Ice Contract, These Provisions Will Constitute The Sole
If this is an ICE contract, these provisions will constitute the sole regulation of re-negotiation but this would be under the existing contract as opposed to ACME’s proposal for an entirely new contract.
Finally, with regard to the extra cost of £1 million, as a result of sub-contracting, it is not uncommon for there to be fluctuations in the contract sum and ICE contracts contain formula adjustment mechanisms to assess these fluctuations. However, as this is a fixed price contract, ACME cannot make any claims for extra payment over and above the £5 million.
Problem (b)
Frustration of a contract can occur as a result of illegality or where the subject matter of the contract is said to be contrary to public policy. Crucially, this does not have to have been the case at the commencement of the contract, but may transpire during performance, especially where a statute has intervened to declare a contract void, such as that which is found under s 18 of the Gaming Act 1845.
Even if there is no statutory illegality, contracts which are deemed to be injurious to good government, such as those concluded with an enemy state are also illegal, but only for the duration of the enemy status. Davis names this heading as being a ‘contract (that is) damaging to the country’s safety.’
The Davis wording for common law illegality would suggest that any contract that constitutes a breach of national security, as is the purported case here, can be declared void. The parameters of what constitutes a breach of national security are not universally defined although guidance is given by the Department for Constitutional Affairs, (DCA) who state that the security of the nation includes:
its well being and the protection of its defence and foreign policy interests, as well as its survival
For the current case, the above guidance would no doubt include the commercial use of satellite and radar landing systems.
Where such contracts are declared void by virtue of either illegality or breach of public policy, the contract is frustrated. This therefore means that it is automatically discharged and all rights and liabilities of the parties ‘lie where they fall.’ This is a principle of the provisions under the Law Reform (Frustrated Contracts) Act 1943, s 1(2), which states that all sums paid are recoverable and all sums payable are no longer due.
In the current case, ACME has incurred expenses of £1.5 million, and in accordance with, s 1(2) the Act, this means that Manchester Airport is liable to pay a just sum for any valuable benefit that they have gained as a result of the work so far done but this cannot exceed any amount that was payable before the date of frustration. Any amounts due before the date therefore have to be ascertained and this information is located within the contract.
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