Film distributors contracted to supply newsreels at a cinematic theatre. The contract was for a minimum of 26 weeks, and after on termination by the distributors on four weeks notice thereafter, but by the cinema on four weeks after the first month. After the 1943 Order, the contract was varied, providing that during the continuance of the Order, a special condition applied to the original agreement: ‘The principal agreement shall remain in full force and effect until such time as the said order is cancelled and thereafter for any unexposed term of the original agreement. Despite the order not being cancelled, the exhibitor gave 4 weeks notice to terminate the agreement. The Act under which the Order had been repealed, but the Order was continued in order to manage supplies of raw film.
Held: The wording could not be construed to imply a restriction whilst only the Order was supported by the Act. There was no effective change of circumstances to support a suggestion of frustration of the contract, and the notice was ineffective.
Viscount Simon said: ‘It is of the utmost importance that the action of a court, when it decides that in view of a supervening situation the rights and obligations under a contract have automatically ceased, should not be misunderstood. The suggestion that an ‘uncontemplated turn of events’ is enough to enable a court to substitute its notion of what is ‘just and reasonable’ for the contract as it stands, even though there is no ‘frustrating event,’ appears to be likely to lead to some misunderstanding. The parties to an executory contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate – a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution, or the like. Yet this does not in itself affect the bargain they have made. If, on the other hand, a consideration of the terms of the contract, in the light of the circumstances existing when it was made, shows that they never agreed to be bound in a fundamentally different situation which has now unexpectedly emerged, the contract ceases to bind at that point – not because the court in its discretion thinks it just and reasonable to qualify the terms of the contract, but because on its true construction it does not apply in that situation.’
Viscount Simon said: ‘The parties to an executory contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate – a wholly abnormal rise or fall in prices, a sudden depreciation of currency, an unexpected obstacle to execution, or the like. Yet this does not in itself affect the bargain they have made.’
Viscount Simon, Simonds, Morton of Henryton, Tucker LL
[1952] AC 166, [1951] 2 All ER 617, [1951] 2 TLR 571, 95 Sol Jo 499
Cinematograph Film (Control) Order 1943, Emergency Powers (Defence) Act 1939
England and Wales
Citing:
Adopted – Nelson Line (Liverpool) Ltd v James Nelson and Sons Ltd HL 1908
Where there is in a contract an absolute promise with an exception engrafted upon it, the exception is to be construed strictly, and extends only so far as it is expressed with clearness and certainty. The parties to an agreement may contract . .
Cited – Shirlaw v Southern Foundries (1926) Ltd CA 1939
The court warned against the over-ready application of any principle to justify the implication of terms into a contract. McKinnon LJ set out his ‘officious bystander’ test: ‘If I may quote from an essay which I wrote some years ago, I then said: . .
Cited – Joseph Constantine SS Line Ltd v Imperial Smelting Corp Ltd 1942
Before a court, he who asserts something must must prove it: ‘Ei qui affirmat non ei qui negat incumbit probatio’
Lord Wight discussed the question of whether there had been ‘a vital change of the law . . Operating on the circumstances.’ . .
Cited by:
Cited – Gold Group Properties Ltd v BDW Trading Ltd TCC 3-Mar-2010
The parties had contracted for the construction of an estate of houses and flats to be followed by the interim purchase by the defendants. The defendants argued that the slump in land prices frustrated the contract and that they should not be called . .
Cited – Classic Maritime Inc v Lion Diversified Holdings and Another ComC 21-May-2009
. .
Cited – Armitage v Staveley Industries Plc CA 1-Jul-2005
. .
Cited – Armitage v Staveley Industries Plc ChD 18-Oct-2004
Pensions entitlement . .
Cited – Davis Contractors Ltd v Fareham Urban District Council HL 19-Apr-1956
Effect of Contract Frustration
The defendant appellants contended that their construction contract was frustrated because adequate supplies of labour were not available to it because of the war.
Held: The court considered how the frustration of the performance of a contract . .
Lists of cited by and citing cases may be incomplete.
Updated: 25 July 2021; Ref: scu.402547
