• In the case of Gamerco SA v ICM 1995 1 wlr 1226, it is demonstrated that the court has broad discretion under the Law Reform (Frustrated Contracts) Act 1943 s1(2), with this they can allow the defendant’s loss to lie where it fell. Additionally, the court will permit the defendants to bear their losses when the claimant’s losses greatly exceed the defendant’s losses.

Facts of the Case

  • The claimant (C), Gamerco, were Spanish pop concert promoters who entered into an agreement with the agents of Guns and Roses, the defendants (D). This agreement entailed that Gamerco would arrange and promote a concert in Madrid, which the claimants paid the defendants for in advance (around $412,500)
  • 5 days before the concert, it was reported that the stadium intended to be used was structurally unsound, the use of the stadium was then banned pending further investigation and thus the permit granted to Gamerco was revoked by the government.
  • As a result, Gamerco brought an action against the defendants, to recover the advance payment made to them.

Issues

  • Gamerco claimed that the contract had been frustrated and thus they sought recovery of their payment, under s1(2) of the Law Reform (Frustrated Contracts) Act 1943. This was brought to the court by the claimants on the basis that the contract had become incapable of performance at no fault of either party to the contract. The contract had been frustrated due to the revocation of the permit, which meant Gamerco, did not breach the contract itself.
  • The defendants, on the other hand, argued that Guns and Roses only held an obligation under the contract to be ready and willing to perform the concert, and because they met and maintained this obligation, there was no frustration of the contract. additionally, the persisted that Gamerco had agreed to bear the commercial risk associated with the concert which included the possibility of the venue being unavailable. The defendants then counterclaimed for losses they had sustained, due to Gamerco’s failure to ensure the permit was in place on the day of the concert which they argued resulted in a breach of contract.

Held by the High Court

  • The court held that the contract had been frustrated and;
  • Under s1(2) of the Law Reform (Frustrated Contracts) Act 1943, the claimant, Gamerco was entitled to restitution of the advance payment made, without any deduction to account for D’s expenses.

Justice Garland

  • The contract was declared frustrated, this verdict was given because the contract had become incapable of performance because the permit had been revoked by the authorities. Furthermore, a term was set out in the contract that Gamerco would take all reasonable steps to attain a permit, which they did, but they were not required to ensure it remained in force. Thus advance payments were recovered under s1(2) of the Law Reform (Frustrated Contracts) Act 1943.

Study Law in the UK

  • This field is for validation purposes and should be left unchanged.