ABSTRACT
If the contract expressly allocates the risk of loss arising from a particular event to one party rather than the other, it should follow as a matter of course that the court should heed the intention of the parties. However, the nature of frustrating events is that in the majority of cases, there will be no express provision, but it may still be possible to infer an intention from the nature of the contract. This appears to be particularly the case where the contract involves long-term speculation in which case, it may be reasonable to assume that the party engaged in the speculation must bear the risk that his speculative venture may not work to his advantage.44 Sometimes, a term of the contract may be capable of interpretation in such a way that it may apply to a particular event, but if the provision is worded very generally, it may be given only a restricted field of application. Thus, in Metropolitan Water Board v Dick Kerr & Co Ltd,45 a construction contract provided that in the event of delays ‘however occasioned’ the contractor would be given additional time in which to complete the project. However, this was held not to extend to a government order which required the cessation of work and the disposal of all the contractor’s equipment during a period of war. The interpretation placed upon the relevant provision by the House of Lords was that it was obviously intended to apply to short term interruptions such as strikes, bad weather or shortage of materials, but not to such a fundamental change of circumstances which had altered the whole basis of the contract as resulted from the emergency order. Accordingly, the contract was held to have been frustrated.
