OCR A2 Law - The Law of Contract - Frustration (3)

3. Radical Change in Circumstance (Commercial Sterility): If the commercial purpose of a contract ceases to exist then the contract 'MAY' be frustrated.

CASE: "Krell v Henry". In this case a hotel room was hired to watch the coronation of King Edward VII, but got postponed as the King fell ill. HELD: Contract = Frustrated as it was no longer needed. 2 days later same question arises to the same judges (CofA). CASE: "Herne Bay Steamship v Hutton". In this case a boat was hired to watch King Edward VII's coronation, but got cancelled cause he fell ill and the defendant was planning to spend the day cruising around the fleet. HELD: Not frustrated as the commercial purpose (sailing the ship around the fleet) was still available.AO2: CofA should have followed the previous decision in 'Krell', but the judges used distinguishing to avoid it. Secondly, Krell had never been overruled.

CASE: "Davis v Fareham". In this case there was a contract for building houses, but there was a shortage of labour, materials and it cost more... taking longer to complete. HELD: Not Frustrated. AO2: Lord Radcliffe stated it isn't hardship, inconvenience or material loss that brings frustration into play, something radical has to happen in order to completely alter the position and the commercial purpose must go.

This principle was confirmed in CASE: "Tsakiroglou v Noblee Thorl". In this case goods were to be transported from Sudan to Hamburg, but the Suez canal was closed, and goods had to be taken around Africa ... taking longer and costing more HELD: No frustration as goods could still be transported.AO2: Itcan be very difficult to prove radical change considering what Lord Radcliffe said. If the facts of 'Krell' came to the courts again today, it would be decided more differently.