All E.R. Rep. 20,
In the 1903 case Krell v. Henry, English flat owner Paul Krell sued flat renter C.S. Henry for breach of contract. Krell had agreed to let Henry use his flat on June 26 and 27, 1902 - during the planned coronation processions of King Edward VII - for £75. However, after paying £25, Henry refused to pay the remaining amount when the coronation was postponed due to the King's illness.
Krell claimed that Henry breached the contract by not paying and using the flat. However, Henry argued that the postponement of the coronation frustrated the contract, as that was the main reason for renting the flat. The trial court agreed with Henry and dismissed Krell's claim, which led to Krell appealing the case.
The Court of Appeal also sided with Henry, determining that the contract was frustrated by the unforeseen postponement of the coronation, thus releasing both parties from their obligations. The court applied the test of frustration, which considers if an unforeseen event makes performance impossible or significantly different from what was agreed.
The court found that without the coronation, the flat held no value or interest for Henry. Additionally, it rejected Krell's claim for damages on the basis that neither party breached the contract. As a result, both parties had to bear their own losses.
This case highlights the legal principle of frustration, which relieves parties from contractual obligations when an unforeseen event makes performance impossible or drastically different from the initial agreement. The doctrine of frustration acknowledges that contracts can be affected by changing circumstances and parties shouldn't be bound by their promises when uncontrollable events render performance impossible or purposeless.
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