Taylor v Caldwell - 1863

Legal Case Summary

Taylor v Caldwell [1863] 3 B&S 826

Introduction

The case of Taylor v Caldwell[1] is a fundamental case in the area of frustration with regards to contract law. Taylor v Caldwell is an extremely important case, as Murray states,[2] “frustration developed to alleviate harshness of absolute obligation rule”. Frustration comes about in circumstances where the courts will discharge the parties of obligations under the contract, therefore meaning that the parties are not liable for any further obligations under the contract.

Case Facts of Taylor v Caldwell

The case centred on a musical hall which the claimant agreed to hire from the defendant. The hall was to be used for ‘grand concerts’ and fetes. However before the performance that the music hall was to be used for; there was a fire and the hall was destroyed. Neither party was at fault for this destruction. The claimant sued for breach of contract. The legal issue is whether because the hall that the claimants had contracted to use could no longer be used, this excuses the rights and liabilities of the parties’obligations under the agreement? Under the doctrine of absolute obligations the defendants would be liable to the claimants because under the agreement they would no longer be able to perform their obligations which had been contracted for; namely the use of a music hall for four days[3]. In the case, Justice Blackburn notes[4] the harshness of this obligation and therefore, it was held that the defendant was released from their obligations under the doctrine of frustration. The reasoning behind this is that this was the most just solution and the one that made the most sense in terms of contract law. If the parties were forced to continue their obligations under the contract even though the music hall was on longer in use then this performance would be very different from the ones that the parties had originally contracted to undertake. The burnt down musical hall renders the contract undoable under the current terms[5].

Analysis of Taylor v Caldwell

However Justice Blackburn does state that this will not always be the case, as he points out in this case it was “absolute and positive”[6] that there were no express or implied terms of the contract that the obligations should carry on. Therefore this means that if such a contract had, had a term in it- be it express or implied- that even in the event of the accidental damage the obligations of the parties were to carry on, then they wouldn’t have been discharged. This is a key principle from the case because while it brings into existence the doctrine of frustration it puts a caveat on it. Justice Blackburn also sets out the example principle of when this type of situation can arise. As the Courts point out these decisions will be made in situations where “the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance.”[7] This phrase gracefully sums up the position. He goes onto say that even if this hasn’t been expressly put into the contract that the excuse is implied by law. This where the crux of the matter lies, as he states that the parties only contracted on a basis on the ‘continued existence’of the chattel. Without the chattel being in existence it was clearly not the intentions of the parties to carry on the obligations of the contract.

Comparison and evaluation of Taylor v Caldwell

However to fully appreciate the impact of Taylor it is important to analyse two following cases to see how the doctrine functions fully. Krell v Henry[8] and Herne Bay Steamboat Co v Hutton[9]. Both of these cases revolve around the procession of Edwards VII that was cancelled due to ill health. In Krell the defendant hired a flat from the claimant. Claimant brought an action to claim the rent was not already paid under the agreement. It was held in this case that the contract had been frustrated by the non-occurrence of the event. The Coronation Procession was the foundation of the contract. However comparing this with Herne Bay where the defendant rented a boat from the claimant to take paying passengers to see a Naval Review that had been organised as part of the Edward VII events day. However this time it was held that the contract was not frustrated this was because neither the review nor the tour of the fleet were at the foundation of the contract.

Both of these case had relied upon Taylor[10][11], the issue centres around the implied terms test from Taylor[12]. Justice Sterling acknowledges the issues[13] from Taylor but stipulates that the defendants could still make use of the boat and visit the fleet therefore the key area of the contract had not been frustrated. But in Krell even though the use of the flat could still be enjoyed its fundamental use had now been diminished. This boils down to the fact there was still an element of commerciality in Herne Bay but this was no longer there in Krell therefore frustrated the contract. Harping back to Taylor, it is evident that there is a close line to be drawn with regards to the implied terms of the contract. These two cases offer an evolution of the rule, the reasoning being that the contract in Herne was not dramatically altered as it was in Krell and Taylor therefore reads into the implied terms of the contract. It would not have been just and equitable to release the parties from their obligations under this contract but it was the just thing to do with regards to the other two cases.

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Footnotes

1 [1863] 3 B&S 826

2 Murray, 2014

3 Ibid

4 Op. Cit N.1

5 Ibid

6 Ibid

7 Ibid

8 [1903] 2 KB 740

9 [1903] 2 KB 683

10 Op.cit. n8

11 Op.cit. n9

12 Ibid

13 Op.cit. n9