Frustration of Purpose Case: Krell v. Henry (1903, ENG) [pp.

845-850]

Facts: The plaintiff wanted to rent out his rooms overlooking a street where processions to the royal coronation were going to take place. The defendant offered to pay £75 to rent the rooms in order to watch the processions. Nowhere in their correspondence was the coronation explicitly mentioned as the reason for the rental. The defendant put down £25 as a deposit. The king got sick and the processions didn’t happen. The defendant refused to pay. The plaintiff sued for the remaining £50 and the defendant countersued for the £25 deposit. The trial court dismissed the plaintiff’s complaint and gave judgment for the defendant on his counterclaim. The plaintiff appealed. Issue: Whether someone who enters into a K can be excused from performance, when the reason he entered the K is frustrated. -Yes. Reasoning: The condition need not be explicitly mentioned in the K itself, but can be inferred from surrounding circumstances. Judge first looks to see if at the time the K was made, there was an implied condition, where both parties knew that the reason behind the K formation was for D to watch the processions. Judge determined that P had only granted D the use of the rooms for a particular purpose (to watch the coronation). Also, the cancellation of the coronation could not have been reasonably anticipated by the parties at the time the K was made. RULE: The doctrine of frustration may excuse performance when the underlying value or purpose of the contract has been destroyed. Notes • D had obligated himself to pay the additional £50. • Nowhere in contract was there an explicit condition of why he was renting it out. ○ But this was an implied condition. § Both parties entered into K for this reason, even though its not in the K. • • • • What was the purpose of the K? Was performance prevented? Was event preventing performance in "contemplation of parties" at time of K? Tests: ○ Was the event causing the impossibility one that could be anticipated or guarded against?

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