You are on page 1of 3

The defendant, CS Henry, agreed by contract on 20 June 1902, to rent a flat at 56A Pall

Mall from the plaintiff, Paul Krell, for the purpose of watching the coronation
procession of Edward VII scheduled for 26 and 27 June. The housekeeper of the premises had
informed Henry that he would have an excellent view of the procession from the room.
Desiring to secure the rental of Krell's flat for the purpose of observing the coronation procession,
Henry wrote the following letter to Krell's solicitor:
I am in receipt of yours of the 18th instant, inclosing form of agreement for the suite of chambers
on the third floor at 56A, Pall Mall, which I have agreed to take for the two days, the 26th and
27th instant, for the sum of 75l. For reasons given you I cannot enter into the agreement, but as
arranged over the telephone I inclose herewith cheque for 25l. as deposit, and will thank you to
confirm to me that I shall have the entire use of these rooms during the days (not the nights) of
the 26th and 27th instant. You may rely that every care will be taken of the premises and their
contents. On the 24th inst. I will pay the balance, viz., 50l., to complete the 75l. agreed upon.

The defendant received the following reply from the plaintiff's solicitor:
I am in receipt of your letter of to-day's date inclosing cheque for 25l. deposit on your agreeing to
take Mr. Krell's chambers on the third floor at 56A, Pall Mall for the two days, the 26th and 27th
June, and I confirm the agreement that you are to have the entire use of these rooms during the
days (but not the nights), the balance, 50l., to be paid to me on Tuesday next the 24th instant.

The parties agreed on a price of £75, but nowhere in their written correspondence mentioned the
coronation ceremony explicitly. Henry paid a deposit of £25 to Krell for the use of the flat, but
when the procession did not take place on the days originally set, on the grounds of the King’s
illness, Henry refused to pay the remaining £50. Krell brought suit against Henry to recover the
remaining balance of £50, and Henry countersued to recover his deposit in the amount of £25.

Judgment[edit]
Darling held in the initial case that there was an implied condition in the contract, using Taylor v.
Caldwell and The Moorcock, and gave judgment for the defendant on both the claim and the
counterclaim. The Court of Appeal dismissed the plaintiff's appeal.
Judge Williams framed the legal question in this case as whether there was an implied condition
to the contract: whether or not while the contract was made, the two parties knew that the reason
behind the contract was for Henry to watch the coronation procession.
The principle that an implied condition that ceases to exist voids the contract stems from the
case of Taylor v Caldwell, which, in turn, was borrowed from Roman law. The principle was
extended, in later cases, to situations in which an underlying condition that was essential to the
performance of the contract, rather than simply being a necessary condition, ceases to exist.
Williams held that such a condition (here, the timely occurrence of the coronation proceeding)
need not be explicitly mentioned in the contract itself but rather may be inferred from the extrinsic
circumstances surrounding the contract. Thus, the parol evidence rule was inapplicable here.
Firstly, he examined the substance of the contract, and then determined whether the contract
was founded on the assumption of the existence of a particular state of affairs.
Williams then determined that given the affidavits of the parties, Krell had granted Henry a
licence to use the rooms for a particular purpose: watching the coronation. He analogized the
situation to one in which a man hired a taxicab to take him to a race. If the race did not occur on
the particular day the passenger had thought, he would not be discharged from paying the driver.
However, unlike the situation in the case, the cab did not have any special qualification, as the
room did, its view of the street. Furthermore, the cancellation of the coronation could not
reasonably have been anticipated by the parties at the time the contract was made.
Romer LJ said,
With some doubt I have also come to the conclusion that this case is governed by the principle
on which Taylor v Caldwell[1] was decided, and accordingly that the appeal must be dismissed.
The doubt I have felt was whether the parties to the contract now before us could be said, under
the circumstances, not to have had at all in their contemplation the risk that for some reason or
other the coronation processions might not take place on the days fixed, or, if the processions
took place, might not pass so as to be capable of being viewed from the rooms mentioned in the
contract; and whether, under this contract, that risk was not undertaken by the defendant. But on
the question of fact as to what was in the contemplation of the parties at the time, I do not think it
right to differ from the conclusion arrived at by Vaughan Williams L.J., and (as I gather) also
arrived at by my brother Stirling. This being so, I concur in the conclusions arrived at by Vaughan
Williams L.J. in his judgment, and I do not desire to add anything to what he has said so fully and
completely.

Stirling LJ concurred.

Caldwell & Bishop owned Surrey Gardens & Music Hall, and agreed to rent it out to Taylor &
Lewis for £100 a day. Taylor had planned to use the music hall for four concerts and day and
evening fetes on Monday 17 June, Monday 15 July, Monday 5 August, and Monday 19 August
1861. They were going to provide a variety of extravagant entertainments including a singing
performance by Sims Reeves, a thirty-five to forty-piece military and quadrille band, al fresco
entertainments, minstrels, fireworks and full illuminations, a ballet or divertissement, a wizard and
Grecian statues, tight rope performances, rifle galleries, air gun shooting, Chinese and Parisian
games, boats on the lake, and aquatic sports.
According to the contract the parties had signed, the defendants were to provide most of
the British performers. Taylor & Lewis agreed to pay one hundred pounds sterling in the evening
of the day of each concert by a crossed cheque, and also to find and provide, at their own cost,
all the necessary artistes for the concerts, including Mr. Sims Reeves. Then, on 11 June 1861, a
week before the first concert was to be given, the music hall burned to the ground. The
plaintiffs sued the music hall owners for breach of contract for failing to rent out the music hall to
them. There was no clause within the contract itself which allocated the risk to the underlying
facilities, except for the phrase "God's will permitting" at the end of the contract.

Judge Blackburn began his opinion by stating that the agreement between the parties was a
contract, despite their use of the term "lease". Under the common law of property in England at
the time, under a lease the lessee would obtain legal possession of the premises during the
lease period, while the contract at issue in this case specified that legal possession would remain
with the defendants.
Blackburn J reasoned that the rule of absolute liability only applied to positive, definite contracts,
not to those in which there was an express or implied condition underlying the contract.
Blackburn J further reasoned that the continued existence of the Music Hall in Surrey Gardens
was an implied condition essential for the fulfillment of the contract. The destruction of the music
hall was the fault of neither party, and rendered the performance of the contract by either party
impossible. Blackburn J cited the civil code of France and the Roman law for the proposition that
when the existence of a particular thing is essential to a contract, and the thing is destroyed by
no fault of the party selling it, the parties are freed from obligation to deliver the thing. He further
analogized to a situation in which a contract requiring personal performance is made, and the
party to perform dies, the party'sexecutors are not held liable under English common law.
Blackburn J thus held that both parties were excused from their obligations under their contract.
Self - induced frustration

The doctrine of frustration only applies where the frustrating event is without fault of either party.
A party cannot rely on self-induced frustration. In The Eugenia(1964) a ship was chartered to
travel from Genoa via Blacksea to India. The route which the ship took to India was via the Suez
Canal. The route taken was in breach of contract. After the ship entered into a dangerous war
zone, it was trapped. Held, the contract was not frustrated, as it was the charterers fault that the
ship had gone into the Suez Canal during the war-time. This rule seems also to apply where
there is negligence on the part of one of the parties.

A particularly interesting example is that of "rainmaker" Charles Hatfield, who was hired in 1915
by the city of San Diego to fill the Morena reservoir to capacity with rainwater for $10,000. The
region was soon flooded by heavy rains, nearly bursting the reservoir's dam, killing nearly 20
people, destroying 110 bridges (leaving 2), knocking out telephone and telegraph lines, and
causing an estimated $3.5 million in damage in total. When the city refused to pay him (he had
forgotten to sign the contract), he sued the city. The floods were ruled an act of God, excluding
him from liability but also from payment.