The Doctrine of Frustration of Contract II

In Chandler v. Webster, [1904] 1 KB 493 Mr. Chandler rented space from Mr. Webster for viewing the coronation procession of King Edward VII to be held on 26th June, 1902. Mr. Chandler had paid part consideration for the same. However, due to the King falling ill, the coronation was postponed. As Mr. Webster insisted on payment of his consideration, the case was brought to the Court. The Court of Appeals rejected the claims of both Mr. Chandler as well as Mr. Webster. The essence of the ruling was that once frustration of contract happens, there cannot be any enforcement and the loss falls on the person who sustained it before the force majeure took place. This formulation was over­ruled by the House of Lords in the historic decision of Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd., [1942] UKHL 4 wherein the harsh consequences of frustration was moderated by the introduction of the law of restitution.

Interestingly, Lord Shaw in Cantiare San Rocco SA (Shipbuilding Company) v. Clyde Shipbuilding and Engineering Co. Ltd., [1924] AC 226 had observed, English law of leaving the loss to where it fell unless the contract provided otherwise was, he said, appropriate only ‘among tricksters, gamblers and thieves’. The UK Parliament took notice of the aforesaid Judgment and legislated Law Reform (Frustrated Contracts) Act, 1943.”

Hon’ble Justice N.V. Ramana, South East Asia Marine Engineering and Constructions Ltd. v. Oil India Limited, [Civil Appeal No. 673 of 2012].

“When Edward VII’s appendicitis caused the postponement of his coronation processions the postponement was only temporary, but its impact… was enduring. He was well known as a lover of good food and wine, clothes, racing, gambling and ladies.”