Discharge

Blackburn Bobbin Co. v. Allen 1918

The seller agreed to supply the buyer with Finnish timber.
Unknown to the buyer, the seller held no stocks but customarily shipped orders directly from Finland.
War broke out and the seller's supplies were cut off.

This event did not frustrate the contract.

The method of supply was irrelevant to it.
All that the buyer knew, the seller held stocks of Finnish timber, or obtained it indirectly from some other country.
The element in the contract which the supervening event destroys must be something which both the parties must have regarded as basic.

Herne Bay Steam Boat Co. v. Hutton 1903

Contract for the hire of a ship to see the Spithead review of the fleet by the King AND to cruise round the assembled fleet.

The contract was not frustrated.

The event relied upon must destroy the very root of the contract. Compare: Krell v. Henry.

Hoenig v. Isaacs 1952 Court of Appeal

The plaintiff agreed to furnish and decorate the defendant's falt for L750.
He completed the contract, but made some of the furniture so unsatisfactory that it required alteration.
The defendant had paid L400 by instalments in the course of the execution of the contract, but, when he was sued for the remaining L350, he invoked CUTTER v POWELL on the ground that the plaintiff had not performed his part.

The contract has been substantially completed.
The plaintiff succeeded, but his claim was reduced by the cost of the necessary alterations.

Where a person agrees to do something for a lump sum, he can normally only sue for payment if the work is substantially performed; the courts will not imply a contract in favour of a plaintiff who has made an express agreement and failed to perform it (rule). No one should be entitled to claim payment unless he has done what he has bargained to do.
But this may work injustice; the word 'substantially' may be subjected to common-sense construction.
Compare CUTTER v POWELL (1795)

Jackson v. Union Marine Insurance Co. Ltd. 1874

A ship was stranded on a reef and was put out of action for a length of time which rendered its voyage commercially impracticable.
Though, since the ship was ultimately repaired, not actually impossible.

Here, the doctrine of frustration received considerable extension.
It was applied to circumstances which rendered the contract no longer viable rather than physically impossible (commercial frustration).

Krell v. Henry 1903

Contract for the hire of a room to see King Edward VII's coronation procession.

It has been frustrated when the procession was cancelled due to the King's illness.

The event relied upon must destroy the very root of the contract. Compare: Herne Bay Steamboat.

Ocean Tramp Tankers Corpn. v. V/O Sovfracht The Eugenia 1964

The Eugenia's charterers allowed her to enter the Canal Zone in face of the obvious danger of closure.

The detention was not treated as frustration.

They brought it about themselves.

Paradine v. Jane 1647

The plaintiff sued the defendant for rent.
The defendant pleaded that a 'German prince, an alien born' had entered the land and expelled him for 4 years, whereby he (the defendant) had had no profit from the land and ought to be excused the rent.

The defendant should have made express provision against such a contingency.

Originally, the law was strict: it took the view that the contract would remain in force.
The parties could have made express provision against the possibility of the event.
Frustration raises the question of what is to become of the contract.

Pinnel's Case 1602

A owed B L100.
B promises to discharge him if he paid L50.
B broke his promise and sued for the whole L100.

It was there laid down that payment of a lesser sum than the amount due, cannot normally be treated as a satisfaction for an existing debt.

Exceptions:
- material alteration in the mode of payment. Thus if A's debt of L100 were due in London and B, to suit his own convenience,
agreed to discharge the debt in return for a payment of L50 at York, B's promise of discharge would bind him. Also, instead of making a part payment, giving an article instead.
'Composition' agreements form an exception to the rule: where a debtor, by agreement with his creditors, undertakes to pay so much in the pound none of them may sue for the full debt. If any of them were to do so, he would be defrauding the others.

Taylor v. Caldwell 1863

A agreed to hire out a music hall to B. Six days before the letting the hall was accidentally destroyed by fire.

The contract was therefore discharged when the hall was destroyed.

The continued existence of the hall was a basic assumption upon which the contract was founded.
The frustrating event rendered further performance physically impossible.
Frustration case.

Tsakiroglou & Co. Ltd. v. Noblee and Thorl GmbH 1962 House of Lords

A contract for the sale of groundnuts which was elastic in its terms as to the date of delivery in Hamburg (the port of destination).

The contract has not been frustrated by the closure of the Suez Canal in 1956.
Had the delivery date been a matter of importance the result might have been different.

A person who seeks to avoid a contract on the ground of frustration must show not merely that the event has rendered the contract more onerous than he had expected, but also that it has destroyed the whole foundation of it.
Something which merely adds to the length of a voyage does not necessarily frustrate a contract the fulfilment of which depends upon the voyage.

W. J. Tatem Ltd. v. Gamboa 1939

A ship was let on charter to the Republican Government to evacuate refugees during the Spanish Civil War.
It was clear that there was a risk of capture by the Nationalists but no provision was made to cover the event.

Despite he obviousness of the risk, capture was held to frustrate the contract.

The supervening event must not normally be one which the parties expressly allowed for in the contract.
But the mere fact that a subsequent effect is foreseeable or even foreseen at the time of the contract does not mean that its occurrence cannot result in frustration.
Here, the frustrating event was the illegal act of a third person (warfare).