Frustration of Purpose

Frustration of purpose refers to an event or action outside of the control of the parties of the contract that renders the objective reasoning of a contract obsolete.

This doctrine comes from the case of Krell v Henry [1903], where the defendant agreed to rent a flat from the plaintiff for the purposes of watching the coronation procession of Edward VII. Henry payed a deposit of 25pounds but refused to pay the remaining balance of 50pounds when the procession was cancelled due to the King falling ill. Krell sued for the remaining money, but it was found that as Henry had rented the flat for the sole purpose of watching the procession, and that the cancellation of the procession would not have been anticipated by the parties at the outset of the agreement, the contract had been frustrated and therefore the further obligations of the parties did not have to be performed.

This should be compared to Herne Bay Steamboat Co v Hutton 1903 where the event only impacted purpose marginally and thus was not deemed to be frustrated. The defendant hired out the claimant's steamship. The purpose of the contract was to take paying passengers to view the Naval Review which was part of King Edward VII's coronation celebrations. The defendants were also offering a day’s cruise for the passengers. The Naval Review was cancelled as the King was ill. The defendant did not use the steamship and the claimant brought an action for the agreed contract price. The defendant argued the contract had become frustrated due to the cancellation of the Naval Review. It was held, The contract was not frustrated. The contract had not been deprived of its sole commercial purpose as it was still possible to perform the days cruise. The Naval Review was not the only commercial purpose of the contract.