Frustration 17 PDF

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Frustration – Taylor v Caldwell Cf Jackson v Union Marine Insurance Co Ltd   In November 1871, the claimant owner of a ship entered into a charter party with a third party charterer.  The ship was required to proceed with ‘all possible dispatch’ from Liverpool to Newport, and there to load a cargo (iron nails) for carriage to San Francisco.  The ship sailed on 2 January 1872, but already on her way to Newport she ran aground.  The ship was not fully repaired until the end of August.  In the meantime, on 15 February, the charterers had given up on the charter and chartered another ship. 

The claimant shipowner brought an action against its insurer (the defendant) for loss of freight.

 The claimant was entitled to recover under the insurance if the freight was lost by a ‘peril of the sea’ but not if it was lost for breach of contract.

Legal impossibility/ subsequent illegality… usually dealing with the outbreak of war. Met Water board v Dick Kerr Co Ltd. [1918] HOL The claimant water board concluded a contract with D contractors for the purposes of building a reservoir The reservoir was to be constructed in 6 years, commencing July 1914.  On 21 February 1916, the Ministry of Munitions exercised its wartime powers to prevent work on the contract continuing, and to disperse and sell the plant as directed by the Ministry.  The claimant sought a declaration that the contract was still continuing. Held:  The performance of the contract had become illegal.  Since the illegality and the delay consequent on it were indefinite, the contract had ceased to be binding.  (There was a clause – condition 32 – expressly dealing with delay caused by difficulties, but it did not cover delay of the kind on question).  Krell v Henry  The defendant saw an announcement in the windows of the claimant’s flat in Pall Mall.  According to this announcement the claimant was willing to hire out his flat on the days of the coronation procession, namely 26 and 27 June.  The defendant hired the flat for the two days (but not the nights).  The written contract did not mention the procession.  Unfortunately, early in the morning of 24 June, the procession was cancelled due to the King’s illness.

 The defendant refused to pay the remaining balance of £50 and the claimant brought an action to recover it. Held:  The principle of Taylor v Caldwell applied so that the £50 did not have to be paid.

Factors excluding frustration

Self induced frustration 2. Express provision 3. Foreseeable events 1.

*law reform for frustrated contracts Economic analysis of the law ...