Wednesday, 19 January 2011

The Royal Wedding .... but what if .... how frustrating !

It is reported that hotels on the intended route of the Royal Wedding planned for April 2011 are doing a roaring trade - see Daily Mail 19th January 2011.   It will be a great day in London and a national holiday.  What would be the position if, having booked a room on the route in order to watch the procession, the wedding was called off for some reason or the route was altered?

An interesting old series of cases in the law of contract offers a clue to the answer.  They are collectively known as the Coronation cases since they arose out of the cancelled Coronation of King Edward VII (1841-1910) which was initially planned for 26th June 1902.  It was cancelled because Edward developed appendicitis.  The Coronation eventually took place in August.

In Krell v Henry 1903, the defendant had agreed to hire a flat with a good view
of the street to watch the coronation. When the coronation was cancelled, he refused to pay.  The judge ruled that the flat had been rented out for the sole purpose of watching the coronation, so the cancellation made the contract impossible to fulfil. Mr Henry did not have to pay. This way of ending a contract is known as frustration.

Not everyone was this lucky. In Herne Bay Steamboat Co v Hutton 1903, the defendant had hired a boat to watch a naval review put on for the coronation, and for an evening cruise.  At first, the ruling was the same as in Krell v Henry. However, on appeal it was held that the boat was not hired solely to watch the review but also to go for a cruise which included the show. This meant that the contract could still be fulfilled, so Mr Hutton had to pay.

These and other coronation cases (e.g. Chandler v Webster) continue to be legal precedents in the doctrine of frustration of contracts a doctrine which remains of significance today.  See "Contract Law - Doctrine of Frustration."  Frustration arises when there is a contract but a subsequent event makes it illegal to perform the contract or it is impossible to perform it or, what is more problematic, where the contractual obligation has become significantly different from that agreed (i.e. frustration of the contractual purpose).  The fact that the subsequent event has made it more expensive to perform the contract does not amount to frustration and the event must have arisen for a reason beyond the control of the parties.  If there is frustration then the parties are discharged from future obligations.

For the Law Student: - read the free resources at Insitelawmagazine
The cases of Gryf-Lowczowski v Hinchingbrooke Healthcare NHS Trust [2005] EWCA 2407 and CTI Group Inc. v Transclear [2008] EWCA Civ 856 are also worth reading for some modern applications of the law of frustration.

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