The case law of Krell v Henry[1] is one of the landmark cases that led to the foundation of the “Doctrine of Frustration of Contract”. This group of cases were known as the “coronation cases” as they arose from the events of the cancellation of the King’s Coronation ceremony.
Facts
- Plaintiff and Defendant signed a contract for Defendant to rent a flat in order to watch the King’s coronation.
- An advertisement in the window of Plaintiff’s flat renting windows to see the coronation prompted Defendant to enter into a contract. However, the contract did not have an express reference to the coronation.
- But the coronation did not take place due to the ill health of the King, therefore, the defendant refused to pay the remaining consideration.
- Plaintiff filed a suit against the defendant to recover the remaining rent money. However, Defendant refused and filed a counter-claim asking for the refund of 25 Pounds previously paid.
- The lower court ruled in the favour of the defendant, stating that there was an implied contract between the parties that the purpose of renting the place was to see the coronation.
- Aggrieved by the decision of the lower court, Plaintiff filed an appeal.
Issues
Whether the subject of the contract has frustrated?
Judgement
In the appellate court, Lord Justice Vaughan Williams upheld the lower court’s judgement and gave the judgement in favour of the defendant stating that he is excused from the performance of his part as the purpose of the contract has been frustrated. For the decision he gave the following reasonings:
- Because his objective for entering into the contract was frustrated, the defendant is excused from performing. The objective of the bargain for the defendant was to see the King’s coronation. This goal was clearly known by both parties and was regarded as the contract’s cornerstone. Furthermore, the rooms were chosen for their usefulness for observing the coronation processions, which was the contract’s aim.
- The contract may still be fulfilled because the defendant could stay in the flat even if the coronation procession did not take place. However, because staying in the flat would provide no profit to Defendant, he must be excused from performing.
- The use of parol evidence to indicate that the subject of the contract, which was flats to view the coronation and was known by both parties, in order to assess whether the contract’s goal was frustrated by the coronation’s non-occurrence, is admissible.
Analysis of the Judgement
The doctrine of frustration has been extended to those cases where there was no physical impossibility of performance of the contract but because of change in circumstances, the adventure was frustrated or by the literal performance of the contract the main object of the contract could not be fulfilled.
As in this case, the defendant hired the flat for the specific purpose of viewing the coronation procession of King Edward VII on June 26. Hence, it was clear to both the parties that the object of the contract was King’s Coronation, which when cancelled, frustrated the contract.
Frustration of Contract Position in India
In India also, impossibility does not mean merely physical impossibility to perform the contract, it also includes situations where the performance of the contract may not be literally impossible, but because of change circumstances, the performance would not fulfil the object which the parties had in mind.
The frustration of the Contract is covered by section 56 of the Indian contract act. it says:
“an agreement to do an act impossible in itself is void”
it is based on the maxim “les non cogit impossibilia” which means “the law does not compel a man to do what he cannot possibly perform.”
In Taylor v Caldwell[2], it was held that when the contract is not positive and absolute, what is subject to an express or implied condition, for example, a particular thing shall continue to exist, then in such a case, if the thing ceases to exist, the performance of the contract is deemed to be impossible and parties are excused from performing the contract.
In Arti Sukhdev Kashyap v Day Kishore Arya[3], it has been held that merely because the performance had to be delayed, it does not mean frustration of the contract. In this case, there was an allotment offload by the development authority with the condition that permission for sale could not be granted before the expiry of 10 years. permission for sale was requested earlier than that and the same was refused as there was no exceptional circumstance for the same. it was here that since there was the possibility of sale after 10 years, the contract had not been frustrated
Conclusion
The doctrine of frustration of contract has been developed by the collective group of “Coronation Cases’. They are developed to prevent the parties from legal implications in cases where the performance of the contract becomes impossible.
The coronation cases are still relevant in the field of contract law and have impacted both English as well as Indian law.
[1] [1903] 2 KB 740
[2] (1863) 3 B & S 826
[3] A.I.R. 1994 NOC 279 (Delhi)