#contract #frustration #law

Krell v Henry [1903] 2 KB 740

FACTS: By a written contract, the defendant agreed to hire a third floor flat on Pall Mall from the plaintiff for 26 and 27 June 1902. The purpose in hiring the room was to view the coronation procession that was to pass along the street below on those dates. However, no express mention was made of this in the contract. King Edward VII fell ill and processions did not take place on the days appointed. The defendant refused to pay the balance of the agreement, denied liability and counter-claimed the money paid as a deposit. The Court of Appeal held that the contract was frustrated. There was a necessary inference from the circumstances, recognised by both parties, that the coronation procession, and the relative position of the rooms was the foundation of the contract which was frustrated by the King's illness. Vaughan Williams LJ stated:

Each case must be judged by its own circumstances. In each case one must ask oneself, first, what, having regard to all the circumstances, was the foundation of the contract? Secondly, was the performance of the contract prevented? Thirdly, was the event which prevented the performance of the contract of such a character that it cannot reasonably be said to have been in the contemplation of the parties at the date of the contract? If all these questions are answered in the affirmative (as I think they should be in this case), I think both parties are discharged from further performance of the contract.