Hey learners,
In 1903, Mr. Henry agreed to rent a flat from Mr. Krell in London for two days. The purpose was special—Henry wanted to watch the grand procession of King Edward VII’s coronation from the flat’s windows. The rent was fixed, and the agreement made no mention of the coronation itself, but both parties clearly understood that this was the reason for hiring the room.
Before the event could take place, the King fell ill, and the coronation procession was postponed indefinitely. Henry refused to pay the remaining rent, arguing that the entire purpose of the agreement was now gone.
The Court agreed with Henry. It held that although performance was still physically possible (the room still existed), the main purpose of the contract was frustrated. Since the coronation procession was the very reason for the agreement, its cancellation made the contract void under the doctrine of frustration.
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Case Name: Krell v Henry
Citation: [1903] 2 K.B. 740
Court: Court of Appeal, England
Year: 1903
Facts of the Case
- The defendant, Henry, agreed to rent a flat from the plaintiff, Krell, for two days at a rent of £75.
- The primary purpose of the rental was to view King Edward VII’s coronation procession along Pall Mall, London.
- The contract did not explicitly mention the coronation, but both parties understood that the rental was dependent on the procession.
- Before the scheduled dates, the coronation was postponed due to the King’s illness.
- Henry refused to pay the rent, claiming that the fundamental purpose of the contract was frustrated.
- Krell sued Henry for breach of contract, asserting that he was still legally bound to pay the rent.
Legal Issue
Whether a contract can be enforced when its main purpose is destroyed by an unforeseen event outside the control of the parties.
Arguments
Plaintiff (Krell):
- Claimed the rent must be paid because the contract did not contain any condition making payment dependent on the coronation.
- Argued that Henry was legally obligated to perform his part of the agreement.
Defendant (Henry):
- Argued that the contract was specifically for viewing the coronation procession, which did not occur.
- Maintained that enforcing the contract would be unfair, as the purpose of the rental had been entirely frustrated.
Judgment
The Court of Appeal ruled in favor of Henry (defendant):
- The court held that the contract was frustrated because the central purpose of renting the flat — to view the coronation procession — was destroyed.
- Since the main purpose of the agreement no longer existed, Henry was excused from paying the rent.
- The ruling emphasized that frustration occurs when unforeseen events undermine the very basis of the contract, releasing both parties from obligations.
Ratio Decidendi (Legal Principle)
“When a contract is made for a specific purpose, and that purpose is destroyed by an unforeseen event without the fault of either party, the contract is discharged, and the parties are excused from performance.”
Simplified: If the core reason for a contract disappears due to circumstances beyond control, the contract cannot be enforced.
Significance
Doctrine of Frustration of Purpose:
- Extended the principle of frustration beyond physical impossibility (Taylor v Caldwell, 1863).
- Recognized frustration based on purpose or event, even if the contract could technically be performed.
- Prevents unfairness when a contract loses its commercial or practical value due to unforeseen events.
Modern Applications:
- Applies in situations like event cancellations, pandemics, natural disasters, or other unforeseen disruptions affecting contracts.
- Krell v Henry is frequently cited in English and Commonwealth courts for contracts frustrated by the non-occurrence of a critical event.
Krell v Henry (1903) is a cornerstone in contract law, demonstrating how courts can discharge contracts when the main purpose is frustrated by unforeseen events.
- It balances legal certainty with fairness.
- Complements Taylor v Caldwell (1863), showing the evolution from absolute contractual liability Paradine v Jane, 1647 to a flexible and equitable approach in modern contract law.