Written By: Falakdipti
|
Forum |
Court
of Appeal |
|
Case |
Krell
v Henry [1903] 2 KB 740 |
|
Decided |
1903 |
|
Rule
of Law |
A party’s duties are discharged where a party’s
purpose is frustrated without fault by the occurrence of an event, which the
non-occurrence of which was a basic assumption on which the contract was
made. |
INTRODUCTION
Krell
v Henry[1] is
an important case and a necessary judgement for law students and practitioners
to understand the Doctrine of Frustration, which comes under section 56[2] of
The Indian Contract Act, 1872 (agreement to do impossible act). It is an
English case and one of the group of cases known as the “coronation cases”[3] which
emerged from occasions encompassing the crowning ceremony of King Edward VII
and Queen Alexandra in 1902.
BACKGROUND
In
this case the plaintiff was Paul Krell and the defendant was C.S. Henry. Both
the parties agreed to enter a contract on June 20, 1902, in Central London in
which the defendant has agreed to rent a flat from the plaintiff to watch the
coronation ceremony of Edward VII from the balcony since the processions were
supposed to pass from the front of the flat. The defendant was promised that
the processions would be perfectly visible from the room. The parties
communicated their acceptance through letters to let the plaintiff use the
rooms during the days (not nights) of June 26 and June 27 and agreed to the
price of £75, of which Henry paid £25 in advance.
However,
Edward VII fell ill with appendicitis a couple days before the coronation
ceremony, due to which the event was postponed to August 9, 1902. Henry,
therefore refused to pay the remaining £50 to the plaintiff Krell, which led to
the latter file a case against the defendant to recover the money, while Henry
countersued[4]
to recover the advance payment of £25 he made before since the coronation did
not take place which was the sole reason he rented the flat in the first place.
The lower court passed the judgment in favour of Henry since it was found that
the condition was implied and both parties were aware of the reason behind the
contract. Plaintiff appealed to a higher court with the theory that the
coronation event was not mentioned in the contract.
ISSUE
AND JUDGEMENT
Issue:
Whether the non-performance of a party
excused when the subject of contract is frustrated, that is, was the defendant
liable to pay the remaining balance to the plaintiff although the coronation
ceremony was postponed.
Judgement:
The judgement of the lower court was
affirmed and the decision was ruled in favour of the defendant and excused from
paying £50 because the purpose of contract was known to both the parties.
Justice Williams, Romer and Stirling referred to the landmark case of Taylor v
Caldwell [1863] EWHC J1 (QB)[5],
which states that when the implied condition is cancelled or postponed, the
contract becomes void. The bench held that the condition need not be mentioned
explicitly in a contract.
It
was also decided that the content of the letters exchanged between the parties
implied that Krell knew the intention behind Henry renting his flat and has
given him permission to stay there to witness the coronation procession.
Moreover, the cancellation of the event was spontaneous and could not have been
anticipated by either of the parties.
ANALYSIS
The
court’s judgement aligned with the precedent judgment(s) and the law. The
decision, which was taken according to British law is in sync with The
Indian Contract Act as well.
Generally,
frustration of contract happens when: 1) when a party passes away or becomes
incapable of performing the contract (Robinson v Davison[6]);
2) a law is amended or a new law is introduced is such that it makes the
performance of contract impossible or illegal (Rozan Mian v Tahera Begum[7]);
3) there is a change of circumstances and the main purpose behind the existence
of the contract is defeated (applicable to the present case).
The
court adequately justified its reasoning. Judge Williams used an analogical
situation to come to the decision. The case, as previously stated, was one of
the “coronation cases” all of which received more or less the same judgements
from their respective courts, implying that the judgement was not against the
law.
Although
there is no way to precisely determine whether Krell knew about the intention
behind Henry renting his flat, the coronation of Edward VII was a huge event,
especially since Britain was governed under a purely monarchical system, which
makes it quite impossible for the plaintiff to not know about the processions
and the defendant’s reason behind the communication of agreement and contract.
Furthermore, the judgement did not cause any monetary loss due to the incident
to Henry or to Krell, who only had to return the sum of £25 he had received in
advance.
Hence,
the judgement made by the court was appropriate.
CONCLUSION
The
case of Krell v Henry is an important case to understand the concept of
frustration of contract. It is still used as a reference case in Indian courts
in today’s time. To conclude, the principles and the rationales used in the
case can be summarised in the rule of law stated before the introduction of the
case comment; “A party’s duties are
discharged where a party’s purpose is frustrated without fault by the
occurrence of an event, which the non-occurrence of which was a basic
assumption on which the contract was made”.
[1]https://web.archive.org/web/20070203064942/http://www3.uninsubria.it/uninsubria/allegati/pagine/1438/priv_comp2.pdf
[2] https://indiankanoon.org/doc/648614/
[3] https://wiki2.org/en/Coronation_cases
[4] https://www.merriam-webster.com/dictionary/countersue
[5] https://www.bailii.org/ew/cases/EWHC/QB/1863/J1.html
[6] https://www.studentlawnotes.com/robinson-v-davison-1871-lr-6-ex-269
[7] https://indiankanoon.org/doc/925586/
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