Krell v Henry [1903] 2 KB 740 is a significant English contract law case that establishes the doctrine of frustration of purpose. The case is part of a group of cases known as the coronation cases, arising from events surrounding the cancellation of the coronation procession of King Edward VII and Queen Alexandra in 1902.
The defendant, CS Henry, entered into a contract with the plaintiff, Paul Krell, to rent a flat at 56A Pall Mall for the purpose of watching the coronation procession of Edward VII scheduled for 26 and 27 June 1902. The contract did not explicitly mention the coronation but was made with the understanding that the flat's main purpose was to provide a good view of the procession. The defendant paid a deposit of £25 but refused to pay the remaining £50 after the coronation procession was canceled due to the King's illness.
In the initial case, Darling J held that there was an implied condition in the contract, and judgment was given for the defendant on both the claim and counterclaim. The Court of Appeal, including Lord Justice Vaughan Williams, dismissed the plaintiff's appeal. The central legal question was whether there was an implied condition in the contract that the coronation procession would take place. Vaughan Williams LJ framed the issue as whether the parties, at the time of making the contract, knew that the contract's purpose was for Henry to watch the coronation procession.
The doctrine of frustration of purpose holds that if, at the time of making the contract, the parties contemplated a specific state of affairs that is essential to the contract's performance, and that state of affairs ceases to exist, the contract may be frustrated. Vaughan Williams LJ held that an implied condition need not be explicitly mentioned in the contract but may be inferred from extrinsic circumstances surrounding the contract. The court considered the substance of the contract and concluded that the purpose of renting the flat was for the specific event of watching the coronation procession.
Romer LJ expressed some doubt but ultimately concurred with the conclusion that the case is governed by the principle of Taylor v Caldwell, which deals with frustration of contract due to the destruction of the subject matter. He considered whether the parties had contemplated the risk of the coronation processions not taking place but concurred with the overall conclusion reached by Vaughan Williams LJ.
Krell v Henry is a landmark case in contract law that established the doctrine of frustration of purpose. It emphasises the importance of implied conditions based on the parties' contemplation at the time of making the contract, especially when a specific event is essential to the contract's purpose.
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