Krell v Henry, 1903: A textbook case

1. The plaintiff rents his apartment to the defendant for a two-day period.
   

1. The defendant’s purpose in making this contract is to view the coronation of King Edward VII.
   

1. The coronation is canceled because the King is taken ill.
   

1. The defendant does not use the premises, refuses to make the payment and is sued by the plaintiff.
   

Henry's rescission is granted because: 1) "King’s sick" is unexpected and occurred after the contract making; 2) the non-occurrence of "King’s sick" is a is a basic assumption of the contract since "King’s sick" falsifies a common belief held by both parties that the coronation would be held, leading to the destruction of defendant’s principal goal in entering into the contract; 3) "King’s sick" is not caused by the defendant; and 4) no explicit clauses of the contract assign the risk of this event to him.

GIS v Fishery: A hypothetical case in the context of ARGUGRID

1. A fishery company contracts GIS company to map areas capable of having fish around a sea port.
   

1. After contract signing, an oil spill occurs, reducing the fish potential so significantly that fishing is clearly not beneficial.
   

1. Fishery asks to rescind the contract on the ground of frustration since the maps delivered by GIS are useless for it.
   

Fishery’s rescission has to be based on 1) "oil spill" is unexpected and occurred after the contract making; 2) the non-occurrence of "oil spill" is a is a basic assumption of the contract since "oil spill" falsifies a common belief held by both parties that fish is potential for fishing, leading to the destruction of Fishery’s principal goal in entering into the contract; 3) "oil spill" is not caused by Fishery; and 4) no explicit clauses of the contract assign the risk of this event to Fishery.

Doctrine of Frustration of Purpose <1,2,3,4>

The doctrine of impossibility is often invoked by sellers but not buyers since the impossibility to supply goods or services could be accepted more easily than the impossibility to make payment. In contrast, its companion doctrine of frustration of purpose is often invoked by buyers. Two doctrines differ only in condition 2. A party could rescind contract on grounds of frustration must show

1. 1.an unexpected event occurred after contract making 2
   

2. 2.non-occurrence of the event was a basic assumption, i.e. the occurrence of the unexpected event falsifies a common belief held by both parties, leading to the destruction of the principal goal in entering into contract of the party seeking relief
   

3. 3. the event is not the fault of the party seeking relief 4
   

4. 4. the party seeking relief does not bear the risk of that occurrence of the event