Frustration in English law
It was held the contract was impossible to perform;[2] Judge Blackburn stated that the absolute liability set forth in Paradine v Jane would not apply in the instant case, as there was an implied condition that the music hall would be in existence at the date of the planned concerts.
The defendant here agreed by contract to rent a flat located at Pall Mall from the plaintiff, for the purpose of watching the coronation procession of Edward VII scheduled for 26 and 27 June.
In this case, an individual hired a steamboat for the purposes of travelling to Spithead to cruise round an assembled fleet, and to witness the naval review of King Edward's coronation.
[14] A common objection to this test was that it was 'artificial'; in many cases, such as Davis Contractors v Fareham UDC,[15] it would not be true to say that both parties would intend for an implied term to cover particular situations.
[16] As a result, a test of contractual purpose is preferred, as laid out in Davis Contractors v Fareham UDC, in the judgement of Lord Reid: The question is whether the contract which they did make is, on its true construction, wide enough to apply to the new situation: if it is not, then it is at an end.
[15]: 721 Where an item or building essential to the contract – which has been expressly identified – is destroyed, through no fault of either party, it can be set aside as impossible to perform, as established in Taylor v Caldwell.
Events such as war may render certain trading or actions illegal, as was the case in Denny, Mott & Dickinson v James Fraser[20] and Ertel Bieber and Co v Rio Tinto Co Ltd [1918] AC 260.
In the First World War-era case Metropolitan Water Board v Dick, Kerr & Co Ltd, a contract for the construction of a reservoir was held to be frustrated following wartime building regulations.
[26] Notcutt v Universal Equipment Co[27] shows that the inability of an employee to perform contractual duties – due to, in this case, a heart attack – frustrates his contract of employment.
[30] Thus, in Davis Contractors v Fareham UDC, the courts declined to render a contract for building work frustrated purely because the price of labour and materials had increased.
[37] Under previous common law rules, this had the effect of producing potentially inequitable results, for example if a pre-payment was paid by one party to the other, it could not be recovered.
[39] Chandler v Webster [1904] 1 KB 493 demonstrates a classical establishment of this, where recovery of a pre-payment for the hiring of a flat under contract (which was subsequently deemed impossible) was unrecoverable.
The position was not reconsidered in English law until Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1942] AC 32, where the House of Lords ruled that payments made in return for no consideration should be recoverable: It is clear that any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is to prevent a man from retaining the money of or some benefit derived from another which it is against conscience that he should keep.
[41] A remaining problem could be found in Whincup v Hughes (1870–71) LR 6 CP 78, where a watch maker died after performing one year of his contractual obligations.
