A Royal Disappointment: The Coronation Cases and the Doctrine of Frustration of Purpose in English Contract Law

The doctrine of frustration of purpose is a key concept in English contract law that provides an exception to the rule of absolute contractual liability. It applies when a supervening, unforeseen event, not caused by either party, destroys the fundamental commercial reason for which the contract was made. Unlike frustration by impossibility, performance remains physically possible, but it has become pointless and radically different from what the parties originally intended. The development of this doctrine is inextricably linked to the 'Coronation Cases' of 1903. In **Krell v Henry**, a contract to hire a flat to view the postponed coronation procession of King Edward VII was deemed frustrated because the court identified the procession as the 'foundation of the contract' for both parties. Conversely, in **Herne Bay Steam Boat Co v Hutton**, a contract to hire a boat to view a cancelled Naval Review and cruise the fleet was not frustrated because a substantial part of the purpose remained intact. These cases established the fine line between a truly frustrated purpose and mere commercial disappointment. When a contract is found to be frustrated, it is automatically discharged from the moment of the frustrating event. The financial consequences are now largely governed by the Law Reform (Frustrated Contracts) Act 1943. This Act allows for the recovery of money paid, the cancellation of sums due, and judicial discretion to award compensation for expenses incurred or valuable benefits conferred before the contract ended, ensuring a more equitable outcome than the harsh common law position of 'letting the loss lie where it falls'.

1. Introduction: The Sanctity of Contracts and the Need for an Escape Route

In English contract law, the traditional principle is pacta sunt servanda – agreements must be kept. Historically, this was interpreted as an absolute rule. If you promised to do something, you were bound to do it, regardless of any subsequent hardship or change in circumstances. The case of Paradine v Jane (1647) famously established this harsh principle of 'absolute liability,' where a tenant was still liable for rent even after being forced off his land by an invading army. However, the commercial and social realities of the 19th century demanded a more flexible approach. The courts began to develop the Doctrine of Frustration, which provides a legal mechanism to discharge a contract when a supervening, unforeseen event, for which neither party is at fault, renders performance impossible, illegal, or 'radically different' from what was originally contemplated.

2. Types of Frustration: Impossibility vs. Frustration of Purpose

The doctrine of frustration is not a single concept but covers several distinct situations:

• Frustration by Impossibility: This is the most straightforward type. The contract becomes physically or legally impossible to perform. The classic case is Taylor v Caldwell (1863), where a contract to hire a music hall was frustrated after the hall burned down. The subject matter of the contract was destroyed, making performance impossible.
• Frustration by Illegality: A contract is frustrated if, after its formation, a change in the law renders its performance illegal.
• Frustration of Purpose: This is the most nuanced and subtle category. Here, performance of the contract remains physically and legally possible, but the core commercial purpose or reason for entering into the contract has completely disappeared. This is where the famous 'Coronation Cases' made their mark.

3. The Main Event: The Postponed Coronation and the Birth of a Doctrine

In 1902, London was preparing for the grand coronation of King Edward VII. Lavish processions were planned, and enterprising individuals rented out rooms and boats with prime views of the festivities at inflated prices. However, just days before the event, the King was diagnosed with appendicitis, and the coronation was postponed. This unexpected event left a trail of contractual disputes, as people who had paid high prices for a view now had a contract for a room with a very ordinary view. These disputes gave rise to the 'Coronation Cases' and solidified the doctrine of frustration of purpose.

Krell v Henry [1903] 2 KB 740: The Landmark Case

Facts: Mr. C.S. Henry agreed to hire a flat in Pall Mall from Mr. Paul Krell for two days, June 26th and 27th, 1902, for a fee of £75. While the written contract made no mention of the coronation procession, the surrounding evidence, including advertisements, showed that the commonly understood purpose of the hire was to view the procession, which was to pass directly by the flat. When the procession was cancelled, Henry refused to pay the outstanding balance of £50.

Decision: The Court of Appeal held that the contract was frustrated. Henry was excused from paying the remaining £50.

Legal Reasoning: Lord Justice Vaughan Williams, in his judgment, established a crucial test. He argued that the court must first ascertain the 'foundation of the contract' by looking at the substance of the agreement and the surrounding circumstances. He concluded that the passing of the coronation procession was the 'foundation of the contract' for both parties. The cancellation of the procession meant that the very purpose for which the flat was hired had ceased to exist. Performance (letting and using the flat) was still possible, but it would be for a purpose 'radically different' from what both parties intended. The contract was not for the hire of rooms, but for the hire of rooms with a specific view of a specific event. When the event was cancelled, the purpose was frustrated.

Herne Bay Steam Boat Co v Hutton [1903] 2 KB 683: The Limiting Principle

This case, decided around the same time, is crucial because it defines the limits of the doctrine and prevents it from being used simply to escape a bad bargain.

Facts: Mr. Hutton hired a steamboat from the Herne Bay Steam Boat Co. for two days. The stated purpose was 'for the purpose of viewing the Naval Review and for a day's cruise round the fleet'. The Naval Review, a fleet inspection by the King, was also part of the coronation celebrations and was cancelled.

Decision: The Court of Appeal held that this contract was not frustrated.

Legal Reasoning: The court distinguished this case from Krell v Henry. While viewing the Naval Review was one purpose of the contract, it was not the sole, foundational purpose. The contract also included a 'cruise round the fleet'. The fleet was still assembled and available to be viewed, so a significant part of the contractual purpose remained intact. The cancellation of the review made the venture less profitable and less exciting for Mr. Hutton, but it did not destroy the entire commercial purpose of the contract. This case establishes the important principle that mere disappointment or a reduction in commercial value is insufficient to frustrate a contract. The purpose must be so completely undermined that what remains is radically different from the original agreement.

4. Consequences of Frustration: The Law Reform (Frustrated Contracts) Act 1943

Under common law, the effect of frustration was blunt: the contract terminated automatically at the point of the frustrating event, and 'the loss lies where it falls.' This meant that money paid before the event could not be recovered, and money due before the event remained payable. This created obvious injustices.

The Law Reform (Frustrated Contracts) Act 1943 was passed to remedy this. The Act provides a statutory framework for a more equitable distribution of losses:

• Money paid before the frustrating event is recoverable.
• Money that was due to be paid ceases to be payable.
• A party who has incurred expenses in performance of the contract before the frustration may be allowed to retain or recover a 'just sum' from the money paid or payable.
• If one party has received a 'valuable benefit' (other than money) before the frustration, the other party may be awarded a 'just sum' in compensation.

5. Modern Relevance

The principles established in the Coronation Cases remain highly relevant. They are often invoked in situations where major public events are cancelled, such as the postponement of the Tokyo 2020 Olympics due to the COVID-19 pandemic. A person who booked a hotel specifically to watch the marathon from their window (à la Krell v Henry) might have a strong case for frustration. In contrast, a tourist who booked a general holiday to Tokyo during that period, with the Olympics being just one part of their planned trip (à la Herne Bay v Hutton), would likely find their contract for flights and accommodation is not frustrated, as the primary purpose of visiting the city is still possible. The doctrine forces courts to analyse the fundamental purpose of an agreement, making it a vital tool for achieving justice when unforeseen events shatter the commercial assumptions underlying a contract.

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