Krell v. Henry – Case Brief Summary

Summary of Krell v. Henry, 2 K.B. 740 (1903).

Facts

Henry (D) contracted to use Krell’s (P) flat in London to view the coronation procession of King Edward VII. Under the terms of the contract Henry was granted use of the flat for two days in exchange for 75 pounds, but the contract did not mention the purpose of Henry’s use. Henry refused to honor the agreement after the King became ill and the coronation was postponed.

Krell sued for the balance due under the contract and Henry countersued for the return of his deposit. The lower court cited Taylor v. Caldwell and entered judgment for Henry on the grounds that the coronation was an implied condition in the contract. Krell appealed.

Issue

Under what circumstances will a party be excused from performance when an unforeseen supervening event occurs?

Holding and Rule

Performance will be excused when the purpose of a contract is frustrated by an unforeseeable supervening event and the purpose was within the contemplation of both parties when the contract was executed. A contract’s purpose may be inferred from surrounding circumstances.

Where a contract indicates that the parties knew that it could not be fulfilled unless some particular specified thing continued to exist, such that the parties must have contemplated the continued existence of that thing as the foundation of the performance; then in the absence of an express or implied warranty that the thing shall continue to exist, the contract is subject to implied condition that performance will be excused if that thing ceases to exist without fault of either party.

The principle also applies where a certain condition or state of things that is essential to performance must continue to exist; in this case, the occurrence of the coronation during the time in which Henry was to have use of the flat. The condition or state of things need not be expressly specified. It is sufficient if that condition or state of things clearly appears by extrinsic evidence to have been assumed by the parties to be the foundation or basis of the contract, and the event which causes the impossibility is of such that it cannot reasonably be supposed to have been in the contemplation of the contracting parties when the contract was made.

Necessary inferences drawn from the contract and surrounding circumstances need to be examined to determine if the contract has in fact become impossible to perform. The purpose for the high rent of the room on those particular dates during the daytime was to view the coronation. The court held that without the coronation, there was no purpose to this contract.

Disposition

Judgment for defendant Henry affirmed.

Notes

This is the seminal case on the doctrine of frustration of purpose.


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