The Midlands Touring Company contract with Lawrence, owner of the Montgommery Theatre, to hire the premises for two weeks to perform their new production of 'Waiting for Godot'. The Montgommery has been in financial difficulties for years and the bank is threatening to foreclose. Two days before opening night, a fire breaks out in the basement of the premises. A maintenance worker notices smoke coming from the stairs and calls Lawrence. Lawrence tells the maintenance worker to vacate the premises immediately and that he will call the fire department. Realizing the insurance on the premises will get him out of his financial difficulties, Lawrence waits half an hour before making the call to the fire department. By that time, the theatre can no longer be saved and the show will have to be cancelled. Can The Midlands Touring Company claim damages from Lawrence for his non-performance, although they have not yet paid the rental price?
A) No, the contract has been frustrated and automatically discharged. Lawrence is excused from performance.
B) Yes, the contract has been frustrated and statutory damages can be claimed through the Law Reform (Frustrated Contracts) Act 1943.
C) Yes, the contract has not been frustrated. Lawrence is in breach of contract.
Correct Answer:
Verified
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