In January, Steven (the owner of Fruitilicous) signed a contract with Jeff (a farmer in Victoria) to supply a shipment of 5 tonnes of Pink Lady Apples each month for the entire year.

The contract provides that Jeff would be paid a total of $300,000 ($25,000 for each shipment of apples) but would only be paid at the end of the year after the twelfth shipment.

The contract also provides that it may be terminated by either party at any time. In August, after the eighth shipment was completed, Jeff contacts Steven and tells him he has a purchaser who is willing to pay twice as much for the apples and will be unable to supply the final four shipments of apples. Jeff asks Steven to pay $200,000 for all the apples that have been delivered to date.

1. Is Steven required to pay the $200,000 to Jeff? (Apply IRAC)

AND/OR

Question 2.

Steven (the owner of Fruitilicous) purchases his fruit directly from farmers all over the country. Steven recently signed a contract with Rebecca (a farmer in Queensland) to provide 3 tonnes of Apricots. The contract provided that Steven would pay Rebecca $4,000 upfront and then another $4,000 in receipt of all 3 tonnes of the Apricots within a month. Five weeks after Steven pays Rebecca the first $4,000, Rebecca calls Steven and tells him that, due to a freak snow-storm during summer, all of the crops were destroyed and that she will be unable to provide Steven any apricots. In order to fulfil his customer's orders, Steven purchases the 3 tonnes of apricots from another supplier at the cost of $10,000.

(a)Has the contract between Steven and Rebecca been frustrated?

(b)What is the consequence of the contract being frustrated?