Frustrated Contracts Act

c t FRUSTRATED CONTRACTS ACT PLEASE NOTE This document, prepared by the Legislative Counsel Office, is an office consolidation of this Act, current to May 16, 2025. It is intended for information and reference purposes only. This document is not the official version of the Act. The Act and the amendments as printed under the authority of the King’s Printer for the province should be consulted to determine the authoritative statement of the law. For more information concerning the history of this Act, please see the Table of Public Acts on the Prince Edward Island Government web site (www.princeedwardisland.ca). If you find any errors or omissions in this consolidation, please contact: Legislative Counsel Office Tel: (902) 368-4292 Email: legislation@gov.pe.ca Frustrated Contracts Act Section 1 c FRUSTRATED CONTRACTS ACT CHAPTER F-16 1. Definitions In this Act (a) “contract” includes a contract to which the Crown is a party; (b) “court” means the court or arbitrator by or before whom a matter falls to be determined; and (c) “discharged” means relieved from further performance of the contract. R.S.P.E.I. 1974, Cap. F-14, s.1. 2. Application of Act (1) This Act applies to any contract governed by the law of the province that has become impossible of performance or been otherwise frustrated, and the parties to which for that reason have been discharged. Exceptions to Act (2) This Act does not apply (a) to a charterparty for the carriage of goods by sea, except a time charterparty or a charterparty by way of demise; (b) to a contract of insurance; or (c) to a contact for the sale of specific goods where the goods, without the knowledge of the seller, have perished at the time when the contract is made, or where the goods without any fault on the part of the seller or buyer, perish before the risk passes to the buyer. R.S.P.E.I. 1974, Cap. F-14, s.2. 3. Moneys paid or payable, where (1) The sums paid or payable to a party in pursuance of a contract before the parties were discharged (a) in the case of sums paid, are recoverable from that party as money received by the party for the use of the party by whom the sums were paid; and (b) in the case of sums payable, cease to be payable. Expenses incurred before parties discharged (2) Where, before the parties were discharged, the party to whom the sums were paid or payable incurred expenses in connection with the performance of the contract, the court may allow that party to retain or to recover, as the case may be, the whole or any part of the sums paid or payable not exceeding the amount of the expenses, and without restricting the generality of the foregoing the court, in estimating the amount of the expenses, may include such sum as c t Current to: May 16, 2025 Page 3 Section 4 Frustrated Contracts Act appears to be reasonable in respect of overhead expenses and in respect of any work or services performed personally by the party incurring the expenses. Valuable benefit received before discharge, collection of (3) Where, before the parties were discharged, any of them has, by reason of anything done by any other party in connection with the performance of the contract, obtained a valuable benefit other than a payment of money, the court may allow the other party to recover from the party benefited the whole or any part of the value of the benefit. Obligation assumed, authority of court (4) Where a party has assumed an obligation under the contract in consideration of the conferring of a benefit by any other party to the contract upon any other person, whether a party to the contract or not, the court may for the purposes of subsection (3) treat any benefit so conferred as a benefit obtained by the party who has assumed the obligation. Insurance moneys not to be considered in court award (5) In considering whether any sum ought to be recovered or retained under this section by a party to the contract, the court shall not take into account any sum that by reason of the circumstances giving rise to the frustration of the contract, has become payable to that party under any contract of insurance, unless there was an obligation to insure imposed by an express term of the frustrated contract or by or under any enactment. Contract contains provisions re frustration, authority of court (6) Where the contract contains a provision that, upon the true construction of the contract, is intended to have effect in the event of circumstances that operate, or but for the provision would operate, to frustrate the contract, or is intended to have effect whether the circumstances arise or not, the court shall give effect to the provision and shall give effect to this section only to such extent, if any, as appears to the court to be consistent with the provision. Parts of contract deemed severable (7) Where it appears to the court that a part of the contract can be severed properly from the remainder of the contract, being a part wholly performed before the parties were discharged, or so performed except for the payment in respect of that part of the contract of sums that are or can be ascertained under the contract, the court shall treat that part of the contract as if it were a separate contract that had not been frustrated and shall treat this section as applicable only to the remainder of the contract. R.S.P.E.I. 1974, Cap. F-14, s.3; 2025,c.11,s.13(2). 4. Uniform construction of Act Repealed by 2025,c.11,s.13(3). R.S.P.E.I. 1974, Cap. F-14, s.4; 2025,c.11,s.13(3). Page 4 Current to: May 16, 2025 t c