Frustration commonly occurs as a result of war - but by no means necessarily. Typical events are:
! Destruction by fire of the subject-matter
! Stranding or sinking of ships
! Requisition of the subject-matter by the government
! Seizure of a ship by a foreign government
! Death or some incapacity, such as illness, which is sufficiently severe that personal performance is impossible.
Robinson v. Davison (1871)
A pianist contracted to give a concert on a certain day but was prevented by illness. It was held that personal performance was at the root of the contract and since this became impossible the contract was discharged.
You should note that in cases other than those which require personal performance, death or illness does not excuse performance under the contract. In the event of death, the deceased’s personal representative must assume the liabilities under the contract.
Furthermore, some circumstances arising may excuse part of a contract being performed, without frustrating the whole.
Sainsbury (HR and S) Ltd v. Street (1972)
A contract was made for the sale of 275 tons of barley from a certain farm. Through no fault of the farmer, the crop yielded 140 tons. The seller claimed to be excused from delivering any of it. HELD: The contract was not frustrated. A term would be implied that the seller was bound, if the purchaser so required, to deliver as much as was grown (i.e. 140 tons).
Various classes of frustrating events can be distinguished - as follows. (a) Cancellation of an Expected Event
These are the so-called “coronation cases”, which all hinge on the same frustrating event. In 1902, just days before his coronation, King Edward VII had an operation for appendicitis. The coronation was postponed.
Contracts the sole purpose of which was directly connected with the event were, therefore, commercially frustrated.
Krell v. Henry (1903)
Krell agreed to hire rooms in his Pall Mall flat to Henry, for the day of the coronation. The rooms overlooked the route. Krell sued for the balance of hire.
HELD: Henry was not liable. The viewing of the procession was the sole basis of the contract, which was, therefore, frustrated.
The same result was arrived at on similar facts in Chandler v. Webster (1904). However, the situation was different in Herne Bay Steamboat Co.
Herne Bay Steamboat Co. v. Hutton (1903)
Hutton contracted to hire Herne Bay’s steamship to take passengers to view the Naval Review at Spithead, and for a day’s cruise around the fleet.
HELD: The contract was not frustrated. Although the Naval Review was cancelled, the fleet was still at anchor in Spithead, and passengers could still cruise around it.
(b) Subsequent Legal Changes or Illegality
If a contract is made on the basis that the performance of it is lawful, and legal changes occur afterwards, making performance illegal, then this will, normally, serve to frustrate the contract. Metropolitan Water Board v. Dick, Kerr & Co. Ltd (1918)
The company contracted with the Water Board, in July 1914, to construct a reservoir and to complete within six years. In August war broke out, and in 1916, under statutory authority, the company was compelled to cease work on the reservoir.
HELD: The contract was frustrated.
On the other hand, a supervening legal prohibition which, to a substantial extent, destroyed the commercial purpose of a lease of a warehouse was held not to frustrate the lease.
National Carriers Ltd v. Panalpina Ltd (1981)
National Carriers leased a warehouse for ten years. Five years later, in 1979, the local
authority closed the only street giving access to the warehouse. It was not reopened until 1981. National Carriers claimed that the lease was frustrated from the date of closure.
HELD: The doctrine of frustration could apply to a lease but, in this case, the disruption caused was not sufficient to frustrate the contract. There were still three years to run out of a balance of five years from the onset of the disrupting event.
(c) Outbreak of War
Outbreak of war can have two effects which may serve to frustrate a contract. In the first place, it renders all dealings or transactions with the enemy illegal. Contracts made but not yet fully performed are, therefore, discharged by frustration. This applies, even though the
contract had envisaged the possibility and provided for its suspension during the course of hostilities.
In the second place, outbreak of war can frustrate the commercial purpose of a contract, even though the parties to it do not become alien enemies.
For example, in Bank Line Ltd v. Arthur Capel & Co. (1919), it was agreed that a ship should be chartered for 12 months. Before delivery, she was requisitioned by the government, and after four months she was released.
HELD: The commercial purpose of the charter agreement was frustrated. However, this will not always apply.
F A Tamplin Steamship Co. Ltd v. Anglo American Petroleum Products Co. Ltd (1916) A ship was chartered for five years, to run between specified ports. While the charter still had three years to run, the ship was requisitioned for use as a troop ship. The charterers were willing to continue to pay the freight but the owners, hoping to obtain higher compensation from the government, claimed that the contract was frustrated.
HELD: The interruption was not sufficient to frustrate the contract.
This decision was by a bare majority of the House of Lords, and it is possible that the fact that it was the owners who wished to take advantage of the situation for their own profit may have affected the result.
The fact that the contract will be made more onerous, or more expensive, will not, in itself, serve to frustrate it, even though, as in the case of outbreak of war, this is a potentially frustrating event. In Tsakiroglou & Co. Ltd v. Noblee Thorl GmBH (1962), sellers agreed to sell and ship ground-nuts from Port Sudan to Europe. Before shipment, the Suez Canal was closed to navigation as a result of war. It would have been possible to ship them via the Cape of Good Hope, and this would have been far more costly, and have taken three times as long. HELD: The extra time and cost of shipment were not sufficiently fundamental to frustrate the contract.
Had the commodity been perishable, the result would, probably, have been different. In a more recent case, it was held that there was no rule or irrefutable presumption that a declaration of war prevented the performance of - and, therefore, discharged - a contract on which the war had a direct bearing. Unless the declaration of war made the contract illegal, it
was the circumstances of the individual contract and the extent to which it was affected that was the governing factor - not the declaration of war per se.
This decision was made as a result of a ship being bottled up in the Shatt al Arab waterway by the Iraq/Iran war (Finelvet AG v. Vinava Shipping Co. Ltd - “The Chrysalis” (1983)).