Summary of Krell v. Henry
Citation: 2 K.B. 740
Relevant Facts: [This matter was an English case] Henry paid to use Krell’s London flat (apartment) in order to view King Edward VII’s coronation. Per the contract, Henry was allowed to use the flat for two days for a fee of 75 pounds. However, the contract did not mention how Henry could use the flat specifically. When the King became sick and the coronation was postponed, Henry refused to honor the contact with Krell. Krell sued Henry for the contract’s balance. Henry responded in kind and countersued in order to obtain his initial deposit for the flat. The lower court entered judgment for Henry, reasoning that the coronation was an implied condition within the contract. That is, Henry would have had no reason to contract to use Krell’s flat if there was not going to be a coronation ceremony. Krell appealed.
Issues: The legal question presented was under what circumstances can a party be excused from (contractual) obligations when an unforeseen event occurs that initial purpose of the contract to become moot?
Holding: On appeal, the Court held that contractual obligations (performance) are to be excused when the purpose of the contract is “frustrated" by an unforeseeable event that prevents the initial purpose of the contract from coming to fruition. The Court also held that the purpose of a contract, when not explicitly stated in the contract (to all terms), can be inferred from supplemental information.
Reasoning: The Court reasoned that when the applicable parties are aware that the contract cannot be fulfilled because of some outside interference, then the original terms can become void, and the obligations under the contract can be voided as well. If there is no explicit warranty concerning such interference, then the terms of the contract cease. If a warranty is part of the deal, then that warranty still applies and must still be put into effect.
Conclusion: This is the seminal case on the doctrine of frustration of purpose.