Bank Line Ltd v Arthur Capel and Co: HL 12 Dec 1918

The defendant ship-owners contracted to lease the ship on charter to the plaintiffs. Before the term, the ship was requisitioned for the war effort. The plaintiffs did not exercise the contractual right given to them to cancel the charterparty. The charterparty embodied no specific date as the date for the initial delivery of the vessel; it was a charter to run from the date when the vessel was delivered, but it embodied a clause providing for an earliest date of delivery and a cancellation date. The defendants then contracted to sell the ship conditionally upon it being released by the government. That happened and the ship was sold.
Held: The application of the doctrine of frustration was not excluded by the contractual term. The requisition and taking of the possession of the steamer was sufficient to destroy Even though an express term may deal with the cancellation of the contract for non-delivery, and also for a cancellation for requisition, such a term here did not prevent the owners from arguing that the contract had been frustrated.
Lord Sumner discussed the doctrine of frustration: ‘One matter I mention only to get rid of it. When the shipowners were first applied to by the Admiralty for a ship they named three, of which the Quito was one, and intimated that she was the one they preferred to give up. I think it is now well settled that the principle of frustration of an adventure assumes that the frustration arises without blame or fault on either side. Reliance cannot be placed on a -self-induced frustration; indeed, such conduct might give the other party the option to treat the contract as repudiated. Nothing, however, was made of this in the courts below, and I will not now pursue it.’
and that a contract: ‘ought not to be left in suspense or to hang on the chances of subsequent events.’
Lord Wrenbury said: ‘The owners agreed to let and the charterers to hire the steamer for 12 months, to commence at a date not fixed so far as Article 1 is concerned, except that it was to be the date when she was placed at the disposal of the charterers at a coal port as ordered by them. The effect of Article 26 is that that date may be any date not before April 1 subject to the right of the charterers to refuse her and to cancel the charter if she is tendered after April 30. During a reasonable time the owners owed to the charterers the contractual duty of tendering the vessel. If they were for reasons beyond their control unable to tender her within a reasonable time their contractual duty in that respect would cease.’
Lord Sumner, Lord Finlay LC, Haldane V, Shaw of Dunfermline L, Wrenbury L
[1918] UKHL 1, [1919] AC 435, 35 TLR 150
Bailii
England and Wales
Cited by:
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CitedMaritime National Fish Ltd v Ocean Trawlers Ltd PC 12-Apr-1935
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. .
CitedJames Scott and Sons, Ltd v R and N Del Sel and Another SCS 22-Jun-1922
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(Hong Kong) . .
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Effect of Contract Frustration
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CitedLauritzen A/A v Wijsmuller BV;( ‘The Super Servant Two’) CA 12-Oct-1989
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CitedBlankley v Central Manchester and Manchester Children’s University Hospitals NHS Trust QBD 5-Feb-2014
The court was asked whether, where a party loses mental capacity in the course of proceedings, such loss of capacity has the automatic and immediate effect of terminating their solicitor’s retainer. The Costs judge had held that, as a matter of law, . .

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Updated: 04 June 2021; Ref: scu.265985