Metropolitan Water Board v Dick Kerr and Co Ltd [1918]
Share
Metropolitan Water Board v Dick Kerr and Co Ltd [1918] AC 119 centred on the frustration of an agreement related to the construction of a reservoir. The case provided insights into the impact of unforeseen events, specifically the outbreak of war, on contractual obligations.
In July 1914, Dick, Kerr & Co entered into an agreement with the Metropolitan Water Board (London) to construct a reservoir within a six-year timeframe. The contract included a provision stating that Dick, Kerr & Co should seek an extension of time from the engineer in case of any delay, irrespective of its cause.
However, two years later, on February 21, 1916, the Ministry of Munitions, in light of the ongoing war, issued an order for Dick, Kerr & Co to cease work and sell their plant. In response, the Metropolitan Water Board (MWB) pursued legal action against Dick Kerr, seeking an order for them to complete the reservoir as initially agreed upon.
The House of Lords rendered a crucial judgment in this case, determining that the contract between Dick, Kerr & Co and the Metropolitan Water Board was frustrated. The court held that the delay clause in the contract, which allowed for an extension of time in the face of any delays, was intended to cover temporary difficulties and not substantial and fundamental changes in the nature of the contract.
The court acknowledged the extraordinary circumstances arising from the war and the Ministry of Munitions' order, deeming them as events beyond the contemplation of the parties when entering into the agreement. Consequently, the House of Lords concluded that the contract had been frustrated due to these unforeseen and drastic developments. The frustration of the contract released Dick, Kerr & Co from their obligation to complete the reservoir, given the unprecedented and substantial changes that had occurred.
This case underscores the principle that the doctrine of frustration may be invoked when unforeseen events fundamentally alter the nature of a contract, rendering performance impossible or radically different from what was initially agreed upon. The court's interpretation of the delay clause as being applicable only to temporary difficulties further highlights the nuanced analysis undertaken to determine the frustration of the contract in the specific context of the case.
In July 1914, Dick, Kerr & Co entered into an agreement with the Metropolitan Water Board (London) to construct a reservoir within a six-year timeframe. The contract included a provision stating that Dick, Kerr & Co should seek an extension of time from the engineer in case of any delay, irrespective of its cause.
However, two years later, on February 21, 1916, the Ministry of Munitions, in light of the ongoing war, issued an order for Dick, Kerr & Co to cease work and sell their plant. In response, the Metropolitan Water Board (MWB) pursued legal action against Dick Kerr, seeking an order for them to complete the reservoir as initially agreed upon.
The House of Lords rendered a crucial judgment in this case, determining that the contract between Dick, Kerr & Co and the Metropolitan Water Board was frustrated. The court held that the delay clause in the contract, which allowed for an extension of time in the face of any delays, was intended to cover temporary difficulties and not substantial and fundamental changes in the nature of the contract.
The court acknowledged the extraordinary circumstances arising from the war and the Ministry of Munitions' order, deeming them as events beyond the contemplation of the parties when entering into the agreement. Consequently, the House of Lords concluded that the contract had been frustrated due to these unforeseen and drastic developments. The frustration of the contract released Dick, Kerr & Co from their obligation to complete the reservoir, given the unprecedented and substantial changes that had occurred.
This case underscores the principle that the doctrine of frustration may be invoked when unforeseen events fundamentally alter the nature of a contract, rendering performance impossible or radically different from what was initially agreed upon. The court's interpretation of the delay clause as being applicable only to temporary difficulties further highlights the nuanced analysis undertaken to determine the frustration of the contract in the specific context of the case.
