{"id":"frustrated-contracts-act-1988","name":"Frustrated Contracts Act 1988","slug":"frustrated-contracts-act-1988","collection":"act","jurisdiction":"sa","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":39161,"registerId":"sa-frustrated-contracts-act-1988-current","compilationNumber":null,"startDate":"2026-04-01","status":"InForce","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Frustrated Contracts Act 1988","content":"South Australia\nFrustrated Contracts Act 1988\nAn Act to reform the law relating to frustrated contracts.\n\nContents\n1\tShort title\n3\tInterpretation\n4\tApplication of this Act\n5\tFrustration of part does not necessarily entail frustration of the whole\n6\tEffect of frustration on contractual obligations\n7\tAdjustment of losses on frustration of contract\n8\tAction for adjustment assimilated to action on the contract\nLegislative history\n\nThe Parliament of South Australia enacts as follows:\n1—Short title\nThis Act may be cited as the Frustrated Contracts Act 1988.\n3—Interpretation\n\t(1)\tIn this Act, unless the contrary intention appears—\nassociation includes a company or other body corporate;\ncontract includes a severable part of a contract;\ncontractual benefit, in relation to a contract, means—\n\t(a)\ta benefit received by a party under the contract;\n\t(b)\ta benefit that is received by a party otherwise than under the contract but—\n\t(i)\tat a cost to the party that is taken into account under this Act in calculating the value of the contractual performance of that party; or\n\t(ii)\tin circumstances in which the receipt of the benefit constitutes part of the contractual performance of that party;\ncontractual performance or performance, of a party to a contract, means the performance by the party of contractual obligations and includes anything done by the party preparatory to the performance of a contractual obligation;\ncontractual return, of a party to a contract, means the figure (which may be positive, zero, or negative) obtained by subtracting from the value of the contractual benefits of that party the value of the contractual performance of that party;\ncourt includes an arbitrator;\nfrustration, in relation to a contract for the sale of goods, includes avoidance of the contract under section 7 of the Sale of Goods Act 1895;\nparty, to a contract, does not include a person who is a party to the contract only in the capacity of a guarantor or indemnifier.\n\t(2)\tA reference in this Act to the value of the contractual performance of a party to a contract is—\n\t(a)\twhere the performance consists of a monetary payment—a reference to the amount of the payment;\n\t(b)\twhere the contract itself places a value on the performance or such a value can be deduced from the contract—that value;\n\t(c)\tin any other case—a reference to an amount calculated as follows:\n\t(i)\tthe costs incurred by the party in carrying out, or preparatory to carrying out, contractual obligations (including, in addition to actual expenditures, a reasonable allowance for work done by the party) will be calculated; and\n\t(ii)\tif it appears that the party would, assuming that the contract had been fully performed, have made a profit or loss, the percentage profit or loss will be estimated, and the amount arrived at under subparagraph (i) increased or reduced by that percentage,\n(and for the purposes of this paragraph it is immaterial that the other parties to the contract may have received no benefit from the performance referred to above).\n\t(3)\tWhere a contract is frustrated by an event that affects the value of contractual benefits received under the contract, that effect on value will be taken into account in any valuation of those benefits made for the purposes of this Act.\n\t(4)\tWhere an event occurring before, or resulting in, the frustration of a contract diminishes the value of a contractual benefit and—\n\t(a)\tthe event consists of, or arises from, a negligent act or omission for which a particular party to the contract is responsible;\n\t(b)\tthe risk of the event occurring is, by law or custom, to be borne by a particular party to the contract or is a risk against which a particular party to the contract should, in accordance with ordinary prudence or good business practice, have insured;\n\t(c)\tthat event consists of, or arises from, an act or omission for which a particular party to the contract is responsible but which is extraneous to the contract,\nthat party will, for the purposes of this Act, be taken to have received a contractual benefit (in addition to any benefits actually received) equivalent to the amount of that diminution of value.\n4—Application of this Act\n\t(1)\tSubject to subsection (2), this Act applies to a frustrated contract—\n\t(a)\tirrespective of whether there is, in consequence of the frustration, a total failure of consideration under the contract; but\n\t(b)\tsubject to any provision made in the contract itself as to the consequences of frustration.\n\t(2)\tThis Act does not apply to—\n\t(a)\ta contract made before the commencement of this Act; or\n\t(b)\ta charter-party (not being a time charter-party or a charter-party by way of demise); or\n\t(c)\ta contract (other than a charter-party) for the carriage of goods by sea; or\n\t(d)\ta contract of insurance; or\n\t(e)\ta contract under which an association is constituted or rules governing the administration of, or rights of membership in, an association are laid down; or\n\t(f)\ta partnership agreement.\n\t(3)\tThis Act binds the Crown.\n5—Frustration of part does not necessarily entail frustration of the whole\nA contract is not wholly frustrated by the frustration of a particular part of the contract if that part is severable from the remainder of the contract.\n6—Effect of frustration on contractual obligations\n\t(1)\tSubject to subsection (2), the frustration of a contract discharges the parties from all contractual obligations (including obligations that should have been, but were not, performed before the date of frustration).\n\t(2)\tThe frustration of a contract does not affect—\n\t(a)\tan obligation that is, according to the proper construction of the contract, to survive frustration; or\n\t(b)\ta right of action, that arose before frustration, for damages for breach of contract (but, in the assessment of any such damages, the fact that the contract has been frustrated and any consequential adjustment, or right to an adjustment, under this Act will be taken into account).\n7—Adjustment of losses on frustration of contract\n\t(1)\tWhere 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.\n\t(2)\tSubject to this section, for the purposes of the adjustment referred to in subsection (1)—\n\t(a)\tthe 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;\n\t(b)\tthe value of the contractual performance, up to the date of frustration, of each party to the contract will be calculated and those values aggregated;\n\t(c)\tthe 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;\n\t(d)\tan 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).\n\t(3)\tWhere 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.\n\t(4)\tWhere, 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).\n\t(5)\tFor the purpose of giving effect to an adjustment under this section, a court may make orders for—\n\t(a)\tthe payment of money (including interest);\n\t(b)\tthe disposition, sale or realisation of property;\n\t(c)\tthe creation of a charge on property;\n\t(d)\tthe appointment and powers of a receiver;\n\t(e)\tany incidental or ancillary matter.\n\t(6)\tWhere—\n\t(a)\ta 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\n\t(b)\tthe party did not know, and could not reasonably be expected to have known, that the contract had been frustrated,\nthe 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.\n\t(7)\tWhere 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.\n8—Action for adjustment assimilated to action on the contract\nAn action for an adjustment under this Act, and for consequential orders to give effect to such an adjustment, may be commenced before a court as if it were an action under the contract that arose at the time of frustration of the contract.\nLegislative history\nNotes\n\t•\tFor further information relating to the Act and subordinate legislation made under the Act see the Index of South Australian Statutes or www.legislation.sa.gov.au.\nPrincipal Act\nYear\nNo\nTitle\nAssent\nCommencement\n1988\n11\nFrustrated Contracts Act 1988\n10.3.1988\n1.4.1988 (Gazette 31.3.1988 p762)\nProvisions amended\nNew entries appear in bold.\nProvision\nHow varied\nCommencement\ns 2\nomitted under Legislation Revision and Publication Act 2002\n\n","sortOrder":0}],"analysis":{"flash_summary":{"complexity_score":7,"scope_assessment":{"changed":false,"description":"The Act itself defines its scope and exclusions (s4(1)–(3)) and states its purpose as reforming the law on frustrated contracts. The text does not indicate a change from an earlier or different original scope; within the instrument the operative scope is set by the listed exclusions, the rule that contract terms about frustration prevail (s4(1)(b)), and that the Act binds the Crown (s4(3))."},"complexity_factors":["Detailed valuation rules for non-monetary performance requiring cost accounting and profit estimation (s3(2)(c))","Default equalisation formula that aggregates and apportions benefits and performance (s7(2)(a)–(d))","Court discretion to adopt an alternative equitable basis in particular cases (s7(4))","Multiple specific exceptions and excluded contract categories limiting application (s4(2))","Interaction with existing contractual provisions that can override the Act (s4(1)(b))","Treatment of post‑frustration performance by an unaware party as pre‑frustration (s7(6)) and grouping of joint parties (s7(7))","Remedial powers that include disposal of property, charges, receiverships and interest (s7(5))","Special valuation rule treating negligent diminution of benefit as an additional benefit to the negligent party (s3(4))"],"plain_english_summary":"When a contract is frustrated, this Act discharges future obligations and requires a court or arbitrator to adjust money/property so parties’ net contractual returns are equalised. It prescribes a default valuation formula (benefits and performance to frustration) but lets courts adopt another equitable basis and order payments, transfers or other remedies. The Act applies to most contracts subject to listed exclusions, preserves pre‑frustration claims, increases valuation burdens, and can be displaced by contract terms allocating frustration risk."},"summary":{"complexity_score":4,"scope_assessment":{"changed":false,"description":"Unable to assess scope change from original intent as the legislative text was not retrievable. Based on general knowledge, the Act's scope is consistent with its stated purpose of reforming the common law position on frustrated contracts in South Australia, following similar legislation in other jurisdictions such as the UK Law Reform (Frustrated Contracts) Act 1943 and the NSW Frustrated Contracts Act 1978."},"complexity_factors":["Actual legislative text was not retrievable — full analysis is impossible","The underlying legal concept of 'frustration of contract' involves nuanced common law principles that the Act modifies","Determining whether a contract is legally 'frustrated' versus merely difficult or inconvenient requires case-by-case legal judgment","Calculating fair apportionment of benefits and losses between parties involves discretionary assessments","Interaction with common law and other State and Commonwealth contract legislation adds interpretive complexity","Complexity score is tentative due to inability to review the actual statutory text"],"plain_english_summary":"**Note: The actual text of this legislation could not be retrieved.** The link provided returned a 'Page Not Found' error from the South Australian legislation website, likely due to a broken or outdated hyperlink following a website update in March 2026.\n\n**What we know about the Frustrated Contracts Act 1988 (SA) from general legal knowledge:**\n\nThis South Australian law deals with **'frustrated contracts'** — a legal concept describing situations where a contract becomes impossible to perform, or radically different from what was agreed, due to an unforeseen event that neither party caused (for example, a fire destroying the subject matter of the contract, or a new law making the contract illegal).\n\n**Who does it affect?**\n- Anyone in South Australia who enters into a contract that later becomes impossible to carry out through no fault of either party.\n- Common examples include: building contracts where the property is destroyed, service contracts where a key person dies, or event contracts disrupted by government bans.\n\n**What does it do?**\n- It provides rules for what happens to money and obligations when a contract is frustrated — for instance, allowing recovery of money paid before the frustrating event, and fair compensation for work already done.\n- Without this Act, the common law (judge-made rules) left parties in an unfair position where money already paid could be lost with no remedy.\n\n⚠️ *Because the actual legislative text was unavailable, this summary relies on general knowledge of frustrated contracts legislation in Australia. Verify the current text directly with SA legislation sources before relying on this for any legal purpose.*"},"issue_detection":{"absurdities":[],"contradictions":[]},"kimi_summary":{"content_quality":"ok","complexity_score":6,"scope_assessment":{"changed":false,"description":"The legislation remains focused on its original purpose of reforming the law relating to frustrated contracts. The scope has not expanded beyond this core function; the various exclusions in section 4(2) and the detailed adjustment mechanism in section 7 are integral to the original reform intent rather than scope creep."},"complexity_factors":["Multiple defined terms with nested definitions (e.g., 'contractual benefit' has sub-clauses (i) and (ii), 'contractual performance' includes preparatory acts)","Complex valuation methodology in section 3(2) requiring cost calculations plus profit/loss percentage adjustments","Mathematical formula approach to 'contractual return' requiring aggregation and equalisation calculations in section 7(2)","Conditional exceptions in section 4(2) excluding six specific contract types","Nested exceptions in section 6(2) preserving certain obligations despite frustration","Discretionary override provision in section 7(4) allowing courts to depart from the statutory formula","Fictional deeming provisions in section 3(4) treating diminished value as 'benefits received' under specific fault-based conditions","Cross-reference to Sale of Goods Act 1895 in definition of 'frustration'","Apportionment rules in section 7(3) for performance spanning multiple contracts","Grouping rule in section 7(7) for joint parties treated as single entity"],"plain_english_summary":"**What this law does:**\n\nThis Act sets out what happens when a contract becomes \"frustrated\" — a legal term meaning something unexpected and beyond anyone's control happens that makes it impossible, illegal, or radically different to perform the contract (for example, a building burns down before construction is finished, or new laws ban the activity the contract was for).\n\n**Key points:**\n\n- **Automatic discharge:** When frustration occurs, both parties are automatically released from their future obligations under the contract.\n\n- **Fair adjustment:** The Act creates a statutory scheme to ensure no party is left unfairly out of pocket. It works by:\n  - Calculating what benefits each party received under the contract up to the frustration date\n  - Calculating what each party spent or did to perform their side of the deal\n  - Working out the \"contractual return\" (benefits minus costs) for each party\n  - Adjusting the figures so both parties end up with an equal share of the overall outcome\n\n- **Court flexibility:** Courts can depart from the standard formula if a different approach would be fairer in the circumstances, and can make various orders including money payments, property sales, or appointing receivers.\n\n- **Protection for innocent parties:** If someone keeps performing after frustration because they didn't know about it, their work still counts toward the adjustment.\n\n**Who it affects:**\n\nAnyone entering into contracts in South Australia (except specific excluded types like insurance contracts, some shipping contracts, partnership agreements, and contracts made before 1988).\n\n**Why it matters:**\n\nBefore this Act, the common law was harsh — if you paid money before frustration, you might lose it entirely even if you received nothing. This Act provides a fairer, statutory framework for unwinding frustrated contracts and sharing the losses (or unexpected benefits) equitably."}},"importantCases":[],"_links":{"self":"/api/acts/frustrated-contracts-act-1988","history":"/api/acts/frustrated-contracts-act-1988/history","analysis":"/api/acts/frustrated-contracts-act-1988/analysis","conflicts":"/api/acts/frustrated-contracts-act-1988/conflicts","importantCases":"/api/acts/frustrated-contracts-act-1988/important-cases","documents":"/api/acts/frustrated-contracts-act-1988/documents"}}