Introduction
This advice concerns a dispute between Kilimani Tech Logistics (KTL) and a local university regarding a contract for the shipment of specialised computer equipment. Following a landslide that blocked the anticipated rail route, KTL has refused to ship the goods via a more expensive road alternative, claiming the contract has been frustrated. This brief will advise the university on the legal standing of KTL’s claim under the Tanzanian law of contract. The central issue is whether increased cost and delay caused by an unforeseen event are sufficient to frustrate a contract.
The Law on Frustration in Tanzania
The doctrine of frustration in Tanzania is governed by statute, specifically the Law of Contract Act (Cap 345 R.E. 2019). The key provision is Section 56(2), which states: “a contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful”.
This statutory rule reflects the common law doctrine of frustration, which discharges parties from their contractual obligations where a supervening event, occurring without the fault of either party, renders performance of the contract impossible or something radically different from what was originally undertaken (McKendrick, 2021). The foundational case for this is often cited as Taylor v Caldwell (1863) 3 B&S 826, where the destruction of a music hall by fire frustrated a contract for its hire.
However, the courts have applied the doctrine very narrowly. A contract is not frustrated simply because performance has become more difficult or expensive than anticipated. This principle was established in the influential English case of Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696. In that case, a shortage of labour and materials meant a building project took 22 months instead of 8 and cost significantly more, but the House of Lords held the contract was not frustrated. The performance was more onerous but not of a different kind from that contemplated in the contract.
Similarly, in Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93, the closure of the Suez Canal meant a seller had to ship goods via the much longer and more expensive route around the Cape of Good Hope. The court held that despite the increased cost, the contract was not frustrated because the fundamental obligation—to ship the goods to the destination—was still possible.
Application to the University's Situation
Applying these legal principles to the facts, KTL's argument for frustration appears weak. The supervening event, the landslide, was indeed unforeseen and not the fault of either party, which is a necessary condition for frustration. However, the consequences of this event do not seem to meet the high threshold required by law.
First, performance is not impossible. An alternative method of transport by road is available. The contract was for the shipment of goods from Dar es Salaam to Mwanza, not exclusively for shipment by rail. While the parties anticipated the use of the railway, this does not appear to have been a strict contractual term making it the only permissible method of performance. Therefore, performance has not become impossible as required by a strict reading of Section 56(2) of the Law of Contract Act.
Second, it is unlikely that performance would be considered "radically different". KTL’s primary complaint is that the road alternative would double the transport costs and extend the journey time from two to eight days. This situation is very similar to the facts in both Davis Contractors and Tsakiroglou. The courts have consistently held that a contract becoming less profitable, or even loss-making, for one party is not a ground for frustration. This is seen as a commercial risk that the party has undertaken. While the delay is significant, the fundamental nature of the service – transporting components from a specific origin to a specific destination – remains unchanged. Therefore, it is highly probable that a Tanzanian court, following persuasive common law authorities, would conclude that the contract is merely more onerous for KTL to perform, not radically different.
Conclusion and Advice
In conclusion, the contract between Kilimani Tech Logistics and the university is unlikely to have been frustrated. The landslide has made the anticipated method of performance impossible, but a viable alternative exists. The fact that this alternative is more expensive and time-consuming does not transform the nature of the contractual obligation to a degree that the law would recognise as frustration. The situation falls into the category of a contract becoming a bad bargain, for which the doctrine of frustration provides no relief.
The university should be advised that KTL’s refusal to deliver the components likely constitutes a breach of contract. The university would therefore be entitled to seek remedies for this breach, such as claiming damages for any loss incurred as a result of the non-delivery.
References
Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696
McKendrick, E. (2021) Contract Law. 14th edn. Palgrave Macmillan.
Taylor v Caldwell (1863) 3 B&S 826
The Law of Contract Act, Chapter 345 of the Laws of Tanzania [R.E. 2019]
Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93
