ICANBusiness LawLaw of Contract: Vitiating Factors and Discharge2020

Kemi entered into a contract to hire a hall from Babatunde in Lagos for a public exhibition at an agreed price of ₦2,000,000. Kemi paid an advance deposit of ₦500,000. Two days before the event, the hall was completely destroyed by an accidental fire without fault from either party. Before the fire, Babatunde had incurred ₦150,000 in non-refundable preparation costs specifically for Kemi's event. Under the Law Reform (Contracts) Law applicable in Lagos State, what are the financial rights of the parties?

AKemi recovers ₦500,000 and Babatunde retains nothing because frustration discharges all liabilities completely
BKemi is entitled to recover ₦350,000, while Babatunde may be allowed by the court to retain ₦150,000 for incurred expensesCORRECT
CKemi forfeits the entire ₦500,000 deposit and must pay the balance of ₦1,500,000
DKemi recovers nothing, but Babatunde must refund ₦150,000
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Why the answer is B, and why the others tempt you.
Under the Law Reform (Contracts) Law (derived from the English Law Reform (Frustrated Contracts) Act 1943), money paid before frustration is recoverable by the payer. However, the court has the discretion to allow the payee to retain up to the amount of expenses incurred for the performance of the contract prior to discharge (₦500,000 paid − ₦150,000 allowed expenses = ₦350,000 recoverable).
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