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Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd (1943) HL
Case Facts:
Case Facts:
- Contract: A written contract for the sale of flax-hackling machines to be delivered to Poland.
- Payment Terms: £1,600 upon order, £3,200 upon receipt of shipping documents. Buyer paid £1,000 upfront.
- Supervening Event: Germany invaded Poland, followed by Britain declaring war. Delivery became impossible due to the war.
- Dispute: Buyer sought the return of their £1,000 deposit.
- The House of Lords held that the buyer was entitled to the return of the £1,000.
- Total Failure of Consideration: The court applied the doctrine of total failure of consideration. This means that when consideration for a payment fails entirely, the money paid is recoverable.
- Conditional Payment: The £1,000 was considered a provisional payment, conditional upon the delivery of the machines (the consideration). Since the consideration failed entirely due to frustration (impossibility of performance), the payment could be recovered.
- Contrast with Final/Absolute Payments: The ruling emphasizes a distinction. If the contract had structured the payment as final and absolute, regardless of performance, it would not be recoverable. This case involved a payment made in anticipation of receiving goods.
- Overruling Chandler v Webster (1904): The House of Lords explicitly overruled the Court of Appeal's decision in Chandler v Webster, which had previously refused to apply the doctrine of failure of consideration in frustration cases. This established a new precedent.
- Frustration: A doctrine where a contract is discharged due to an unforeseen event making performance impossible, illegal, or radically different from what was agreed.
- Total Failure of Consideration: A doctrine where money paid is recoverable if the consideration for which it was paid fails entirely.
- Conditional vs. Absolute Payment: The nature of the payment (whether it's conditional on performance or absolute) is crucial in determining recoverability under failure of consideration.
- Distinguish between conditional and absolute payments in contracts. Understand how this distinction impacts the application of the total failure of consideration doctrine.
- Understand the doctrine of frustration. What types of events constitute frustration? How does frustration discharge a contract?
- Compare and contrast Fibrosa with Chandler v Webster. What key difference in reasoning led to the overruling?
- Analyze the facts of Fibrosa carefully. Why was the £1,000 considered a provisional payment, rather than an absolute payment?
- Consider the practical implications of the Fibrosa decision. How does it affect the allocation of risk in contracts where performance becomes impossible due to unforeseen events?
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