Cases and Materials on Contract Law

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Prior to 1963, parties to a contract, under English law, are strictly bound to their obligations. In the 1647 case, for example, of Paradine v Jane, 1 the Court did not heed the Defendant’s plea to be exempted from paying the lease of the land during the time that it was forcefully taken over by enemy forces expelling him in the process and precluding him from using and profiting from it. The Court declared him liable for the payment of the lease even during the occupation period because “when the party by his own contract creates a duty or charge upon himself, he is bound to make it good, if he may, notwithstanding any accident by inevitable necessity, because he might have provided against it by his contract.” 2 That decision was therefore, justified by the Court on the ground that the parties could have easily made provisions concerning force majeure events or events that are beyond the control of man.

The doctrine of frustration began to take shape with the case of Taylor v. Caldwell 3 in 1863, where the Court had laid down the “impossibility of performance arising from the perishing of the person or thing” as the first exception to the requirement of absolute performance of an obligation under a contract. In this case, the Court relaxed their strict interpretation of the privity of contracts by ruling in favor of the Defendants who were sued by the Plaintiffs for breach of contract for failure of the former to perform their obligation. The Plaintiffs had previously entered into an agreement with the Defendants, owners of Surrey Gardens and Music Hall, for the use of the latter’s hall for a series of concerts as well to be produced by them. Before the concerts could take place, however, the place burned down. Despite the force majeure aspect in this case, which has parallelism to the earlier Paradine case, the Court ruled in favor of the Defendants. The Court justified its ruling on&nbsp.the ground that the contract had set an implied condition: the continued existence of the music hall.