3 Foundation of the contract destroyed.The parties
may have made their contract on the basis of some
forthcoming event. If the event fails to take place and, as
a result, the main purpose of the contract cannot be
achieved, the doctrine of frustration will apply.
The doctrine of frustration will not apply in the fol-
lowing situations:
■Where the parties have foreseen the likelihood of
such an event occurring and have made express pro-
vision for it in the contract.
■Where one of the parties is responsible for the frustrat-
ing event. This is known as ‘self-induced frustration’.Part 3Business transactions
252
Krellv Henry(1903)Henry hired a room overlooking the route of Edward VII’s
coronation procession. The procession was cancelled
owing to the King’s serious illness. Although it would
have been possible to come and sit in the room, the
main purpose of the contract, to view the procession,
had been destroyed. The Court of Appeal held that the
contract had been frustrated.A contract will only be frustrated if the change in
circumstances has had a substantial effect on the main
purpose of the contract.
Herne Bay Steam Boat Companyv
Hutton(1903)
The claimant agreed to hire a steamboat, the Cynthia,
to the defendant for two days so that the defendant
could take paying passengers to see the naval review at
Spithead on the occasion of Edward VII’s coronation. An
official announcement was made cancelling the review,
but the fleet still gathered and the Cynthiacould have
been used for a cruise around the fleet. The defendant
did not make use of the boat and the claimant used her
for ordinary sailings. The claimant sued for £200, which
was the outstanding balance on the contract to hire the
boat. A Court of Appeal held that the contract was not
discharged through frustration. The happening of the
naval review was not the foundation of the contract. The
claimant was entitled, therefore, to recover the £200 he
was owed under the contract.The fact that the contract has become more difficult and
more expensive to carry out will not excuse the parties.
Tsakiroglou & Co Ltdv Noblee and Thorl
GmbH(1961)
In October 1956 sellers agreed to deliver ground nuts
from Port Sudan to buyers in Hamburg, shipment to take
place during November/December 1956. On 2 November
the Suez Canal was closed to traffic. The sellers failed to
deliver and, when sued for breach of contract, arguedthat the contract had been frustrated. Clearly, it had not
become impossible to carry out the contract: shipment
could have been made via the Cape of Good Hope – a
longer and much more expensive operation. The House
of Lords held that this was not sufficient to discharge the
contract for frustration.Davis Contractors Ltdv Fareham Urban
District Council(1956)
The claimant contractors agreed to build 78 houses in
eight months for the defendant council. Owing to post-
war shortages of skilled labour and building materials, it
took the contractors 22 months to complete the houses
at an additional cost of £17,651. The claimants argued
that the contract was frustrated because of the long
delay caused by circumstances beyond their control and
they should be able to recover the full cost incurred on a
quantum meruitbasis. The House of Lords held that the
contract was not discharged by frustration. The contrac-
tors could have foreseen the possibility of shortages and
taken it into account when tendering for the work.Maritime National Fish Ltdv Ocean
Trawlers Ltd(1938)
The appellants chartered a trawler from the respondents
which needed to be fitted with an otter trawl. It was
illegal to operate with an otter trawl unless a licence had
been obtained. The appellants applied for five licences to
cover four trawlers of their own and the trawler on charter;
however, they were granted only three licences. They
decided to nominate their own trawlers for licences rather
than the chartered trawler. The Judicial Committee of the
Privy Council held that the contract was not frustrated
as the appellants had decided quite deliberately not to
nominate the respondents’ trawler and were, therefore,
responsible for the frustrating event.The doctrine of frustration was considered recently by
the Court of Appeal in Edwinton Commercial Corpora-
tionv Tsavliris (Worldwide Salvage and Towage) Ltd,
The Sea Angel(2007), a case which required the court to