Question 6 (20 points)

Johnny runs a building business called Rose Homes. He employs two apprentices, Fred and Ethel, who are on lower wages than usual tradespersons. Johnny also employs another two fully-qualified labourers, Eddie and Bruce, on a day-to-day basis.

Johnny signs a contract to build a house for a client, Frida, in Cambridge, Tasmania. The price is agreed, and a time schedule is set for the completion of the new house.

Johnny organises for the work to begin, but the foundation work takes much longer than anticipated, because several large rocks are buried within the soil and need to be removed. In the meantime, Eddie and Bruce have found work elsewhere, and Johnny cannot find anyone else to do the heavy work needed on the new construction.

Moreover, Fred has now finished his apprenticeship, and so will have to be paid full trade wages. Ethel has had to move interstate and is no longer available.

Johnny is stuck without labour to finish the construction of Fridas house, and the cost of having to employ tradespeople means he will lose money on the construction of the house. Johnny wants to end the contract. He believes that, under the circumstances, the contract has been frustrated and is impossible to complete. Johnny informs Frida that she cannot continue the work, but would like to be paid for work on the foundations.

Advise Johnny:

a. Can he claim that the contract is frustrated? and b. Can he ask for payment for work done?

In your answer, please refer to relevant case law and/or legislation.