BUSINESS LAW ASSIGNMENT

CASE 12 - Joseph Constantine Steamship Line Ltd Vs Imperial Smelting

Corporation Ltd (1941)

Submitted to

M.Nagarajan
B.Sc., B.L, PG D.P.M (NIPM), UGC NET, ML
Advocate
Trade Marks Attorney

Submitted by

Group 12
Rahul Sasimohan K 215117057
Souganth Sugathan M 215117058
Fuad Rasheed 215117059
Abhay Vishnu V S 215117060
Deepayan Biswas 215117061

NATIONAL INSTITUTE OF TECHNOLOGY, TIRUCHIRAPPALLI

 CASE - Joseph Constantine Steamship Line Ltd Vs Imperial Smelting
Corporation Ltd (1941)

The plaintiff charted a ship of the defendant company to load a cargo on a certain date
to be despatched. But before that date, the boiler was damaged due to explosion in
vessel’s boiler room. It made ship unfit to undertake the voyage at the scheduled time.

WHAT HAPPENED

In August 1936, the appellants, who were the owners of a steamship

the Kingswood, chartered the ship to the respondents for a voyage with a cargo of ores
and concentrates from Port Pirie in South Australia to Europe on a certain date. On
January 3, 1937 while ship was anchored in the roads at Port Pirie, and there was an
explosion in ship’s boiler room before that date, which caused significant damage to
the steamer. It made impossible to undertake the voyage at the scheduled time.

Following this accident the appellants gave notice to the respondents to the
effect that they did not perform the charterparty. The respondents (charterer), claim
damages from the appellants under allegation that the owners have broken the
charterparty by failing to load a cargo. The appellants sought the defence in that the
contract was ‘frustrated’ by the destructive consequences of the explosion on
the Kingswood.

The respondents (charterer), contended in reply, that this frustration does not
suffice to excuse the appellants from having to pay damages for non- performance
unless the appellants establish affirmatively that the explosion occurred without any
fault on their part. The appellants, on the other hand, contend that, once the frustrating
event is proved, the onus is on the respondents to establish such default on the part of
the appellants as would deprive the latter of their right to rely upon it.
UNDERSTANDING

The above case comes under the doctrine of frustration. The court’s decision
was that a frustrating event took place (like in this case explosion had occurred in the
boiler room) means that the contract is automatically brought to an end from the time
of frustration. What was a binding contract becomes void and the parties are excused
from further performance by operation of law.

SECTIONS APPLICABLE UNDER THE INDIAN CONTRACTS ACT, 1872

SECTION 56

A contract to do an act which, after the contract is made, becomes impossible,

or, by reason of some event which the promisor could not prevent, unlawful, becomes
void when the act becomes impossible or unlawful.

The essential idea of this doctrine is based on the impossibility of performance

of the contract. The changed circumstances (supervening event) make the
performance of contract impossible and parties are absolved from the further
performance of it as they did not promise to perform the impossibility.

Specific grounds for Frustration:

1. Destruction of Subject-matter: It was clarified in the landmark TAYLOR Vs

CALDWELL case, where the contract was entered into for the use of the musical hall
for concert purpose, but before the day of the concert, the hall was destroyed by fire,
held that performance becomes impossible.

2. Change in Circumstances: Such change makes performance impossible or tough in

the manner and the time contemplated.

Illustration: A and B contract to marry each other. Before the date of marriage, A goes
mad. The contract becomes void.
3. The Death of Incapacity of the Party: When the nature of the contract demands
personal performance of the promisor, his death of incapacity puts an end to the
contract.

Illustration: A entered into a contract with M.F. Hussain where Hussain has to paint.
However, he dies before the date of such painting. The contract becomes frustrated.

4. Government Legislation: When the government passes an act or law, and the object
of the contract goes against the law.

Illustration:SC bans liquor shops within 500 metres of the highway.

5. The Intervention of War: Suppose A(from India) and B(from Pakistan) enters into a
contract for the trade of some item. Subsequently, Pakistan or India proclaims war
against each other. The contract becomes void.

The effect of frustration is that the dissolution of the contract occurs automatically.

REASONING GIVEN FOR JUDGEMENT

The trail of this case was conducted in the House of Lords, before Viscount
Simon L.C., Viscount Maugham, Lord Russell of Killowen, Lord Wright and Lord
Porter. 1941 Feb. 20, 21; May 9.

Viscount Simon LC said: ‘There can be no discharge by unforeseen

impossibility if the express terms of the contract bind the parties to performance
notwithstanding that the unforeseen event may occur.’ The House of Lords therefore
concluded that the ship owners having, established that the explosion frustrated the
commercial object of the adventure, and were not bound to prove further that the
explosion was not due to their neglect or default. According to the defence the owner
succeeds.
CONCLUSION

It is well to emphasise that when ‘frustration” in the legal sense occurs, it does not
merely provide one party with a defence in action brought by the other. It kills the
contract itself and discharges both parties automatically.