(1)Where a contract becomes impossible to perform or is frustrated and where a party cannot show that the other party assumed the risk of impossibility, the parties to the contract shall be discharged from the further performance of the contract.

(2)Any sum paid or payable to a party under a contract before the time the parties are discharged under subsection (1) shall, in the case of the sum paid, be recoverable from the party as money received by that party for his or her use and in the case of any sum payable, cease to be payable.

(3)Where a party to whom any sum was paid or was payable under subsection (2), incurred expenses before the time of discharge in, or for the purpose of, the performance of a contract, the court may, where it considers it just to do so, having regard to all the circumstances of the case, allow the party to retain or, as the case may be, recover the whole or any part of the sums paid or payable, which shall not exceed the expenses incurred.

(4)Where a party to a contract has by reason of anything done by any other party to the contract or for the purpose of the performance of the contract, obtained a valuable benefit, other than a payment of money to which subsection (3) applies, before the time of discharge, the other party shall recover from the party a sum, if any, not exceeding the value of the benefit to the party obtaining it, as the court may consider just, having regard to all the circumstances of the case and in particular—

(5)For the purposes of subsection (4), in estimating the amount of any expenses incurred by any party to the contract, the court may, without prejudice to the general effect of that subsection, include a sum that appears to be reasonable in respect of overhead expenses and in respect of any work or services performed personally by that party.

(6)In considering whether any sum ought to be recovered or retained under this section by any party to a contract, the court shall not take into account any sums which, by reason of the circumstances giving rise to the frustration of the contract, 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 law.

(7)Where any person assumed obligations under a contract in consideration for conferring a benefit by a party to the contract upon any person, whether that person is a party to the contract or not, the court may, if in all the circumstances it considers it just to do so, treat for the purposes of subsection (3), any benefit conferred as a benefit obtained by the person who assumed those obligations.