ABSTRACT
At common law, the financial consequence of frustration was, in effect, that the contract was ‘frozen’. Any money which had been paid to the other party before the frustrating event was not recoverable, and any money which was payable but hadn’t been paid had to be paid. Thus, in Chandler v Webster (1904), the facts of which were similar to Krell v Henry (above), the contract for the use of the room for viewing the coronation stipulated that the price of the room, £141 15s, was payable immediately. The plaintiff had paid £100 on account, and sued to recover this sum. The defendant counter-claimed for £41 15s. Held: The plaintiff failed and the defendant’s counter-claim succeeded. (Krell v Henry was different, since the rent for the room didn’t become due until after the procession.)
This treatment of frustrated contracts attracted widespread criticism. In particular, it was thought that where the consideration given by one party had totally failed, the other party ought to be entitled to recover the money he had paid, or property he had transferred. In the Fibrosa case (above), the House of Lords ruled that money paid in pursuance of a contract where the consideration had totally failed was recoverable by the party who had paid it. However, this solution gave rise to as much dissatisfaction as the earlier one in Chandler v Webster (above). There was thus a need for legislation in order to attempt to reach a just result as between the parties.
