Law of Contract: Frustration.Historical background. Last updated 28-Dec-2014

It is ironic that Aeneas’s shabby excuse to Dido has become the watchword of the modern doctrine of frustration. Aeneas’s desertion of Dido has not played well down the ages. However, there is another view (‘At pius Aeneas quamquam lenire dolentem solando cupit et dictis auertere curas, multa gemens magnoque animum labefactus amore iussa tamen diuum exsequitur classemque reuisit. - But pious Aeneas, although he desired by consolation to lessen her grief and deflect her worries with his words, with much groaning, his heart weakened by a great love, he followed the orders of the gods and returned to his fleet’ Aeneis.IV.393).
Footnote from judgment of Rix LJ in The Sea Angel [2007] EWCA Civ 547.

Non haec in foedera veni

The English Common law historically holds the parties to their bargain, thus leaving them to make their own provisions for events outside of their control, for circumstances which may make their obligations more burdensome and for instances which may render further performance of contract impossible.

This principle has been conferred into a long standing rule of law insisting on literal performance of absolute promises with the roots coming back to the medieval times. Rule has been expressed in Paradine v Jane (1647) Aleyn 26, in the following words:

… when the party by his own contract creates a duty or charge upon himself, he is bound to make it good if he may, notwithstanding any accident by inevitable necessity, because he might have provided against it by his contract.

It has been recognised and applied in a number of cases, the most prominent of which was Atkinson v Ritchie (1809) 10 East 530, in which Lord Ellenborough at p.533 denied  availability to the shipowner of the way to escape from his contractual obligations on the pretext of threatening embargo.

Their relative claim upon, and duties in respect of, each other are conclusively fixed and detined [spelling used in the original] by the terms of their own written contract. No exception (of a private nature at least) which is not contained in the contract itself, can be engrafted upon it by implication, as an excuse for its non-performance.

The words ‘if he may’, in Paradine case, were not given any consideration, although they seem to be able to limit the promisor’s duty to perform to the circumstances when such performance is still within bounds of his possibilities. Lord Wright in Joseph Constantine Steamship Line, Limited v. Imperial Smelting Corporation, Limited [1942] A.C. 154 at p. 184 has confessed himself quite unable to find a clear meaning to these words:

I am not clear what "if he may" means. It may mean "legally may," but the reference to inevitable accident seems inconsistent with reading "if he may" as reserving impossibility.

Anyhow, this rigorous rule served as a good law until about the middle of the nineteenth century, with some exceptions, however, when, for example, in a contract of apprenticeship the death of a party was held to have the effect to dissolve the contract without any liability being imposed for the consequences of a failure to perform the contract in accordance with its terms. Footing on such type of contracts, i.e. when a person binds himself to do something which requires to be performed by him in person, Blackburn J in Taylor v Caldwell (1863) 3 B.&S. 826, applied same principle to commercial contracts, stating that if the parties, when entering into the contract, contemplated continuing existence of some particular specified thing, then such a contract is subject to an implied condition, that the parties shall be excused in case, when performance becomes impossible from the perishing of said particular thing without default from either side.

Henceforth the doctrine of frustration began its existence as "a device by which the rule as to absolute contracts are reconciled with a special exception which justice demands".

Blackburn J. avoided direct conflict with Paradine v Jane (1647) Aleyn 26 and Atkinson v Ritchie (1809) 10 East 530, which expressly denied availability of any implied condition to release the parties from their contractual obligations by confiding the principle of Taylor v Caldwell to instances where the subject-matter of contract perished. But, very soon the doctrine has been further evolved, first in Jackson v Union Marine Insurance Co Ltd (1874) LR 10 CP 125, and later, in so-called ‘coronation cases’, to encompass its application to instances where the subject-matter of contract did not cease to exist but where the cessation or non-existence of an express condition or state of things, going to the root of the contract, and fundamental to its performance has taken place. Frustration is always a question of fact and law since it involves a conclusion of law as to whether frustrating event has made the performance of the contract a thing radically different from that which was undertaken by the contract.

Two types of frustration sometimes distinguished as discharge by impossibility of performance and dissolution by frustration. Although both categories do look similar, in case of impossibility of performance the parties discharged because of subject-matter of the contract ceased to exist and thus further performance of respective contractual duties becomes impossible, whereas in case of dissolution, both sides could do exactly what they had in terms contracted to do, but the basis of the contract went because the achievement of its main purpose was frustrated. Moreover, in cases of dissolution by frustration the common purpose of both parties shall be equally dissolved to trigger the doctrine that means if any part of contractual purpose can be achieved the doctrine is not applicable.

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