Prior to the outbreak of war in 1914 an engineering firm in Scotland entered into a contract with an Austrian shipbuilding company to make and deliver a set of marine engines By the terms of the contract the price was to be paid in instalments, the first instalment being due on the signing of the contract and the remaining ones as the work progressed. All the instalments were to be merely payments on account of the supply of the completed engines, and were not allocated to any particular stage or the completion of any particular part of the work. After the first instalment had been paid war broke out and further performance of the contract became illegal, the foreign company having become an alien enemy. At that date no part of the engines had been constructed. After peace had been declared the shipbuilding company, which had become Italian, brought an action for repetition of the instalment paid. Held ( rev. the judgment of the First Division, diss. Lord Mackenzie) that as delivery of the subject of the contract had become impossible in consequence of the outbreak of war the consideration in respect of which payment was made had failed, and that accordingly the pursuers were entitled to repayment of the instalment in question, and appeal sustained.
Earl of Birkenhead, Viscount Finlay, Lord Dunedin, Lord Atkinson, and Lord Shaw
[1923] UKHL 635, 60 SLR 635
Bailii
Scotland
Contract
Updated: 26 January 2022; Ref: scu.633264