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Herne Bay Steam Boat Company v Hutton (1903) CA
Case Summary: This case concerns a contract for the charter of a steamboat, the Cynthia, for two days. The defendant, Hutton, intended to use the boat to view a naval review at Spithead, connected to the coronation of Edward VII. The review was cancelled due to the coronation's postponement, and Hutton refused to pay the remaining hire charges, claiming frustration. The court disagreed.
Key Facts:
  • Contract: Hutton chartered the Cynthia for June 28th and 29th to take paying passengers to view the naval review and cruise around the fleet. The contract stipulated the boat's availability on specified dates at a Southampton pier, regardless of external events ("perils of the sea, &c, permitting").
  • Frustrating Event: The naval review's cancellation. The fleet remained at Spithead, but Hutton did not use the boat.
  • Plaintiff's Argument: Hutton breached the contract by refusing payment despite the boat being available as agreed.
  • Defendant's Argument: The contract was frustrated by the naval review's cancellation; the purpose of the contract was impossible.
Court's Decision: The Court of Appeal held that the contract was not frustrated. Hutton was liable for breach of contract.
Reasoning:
  • Contractual Purpose: The core of the contract was the provision of the steamboat for the specified dates, not the viewing of the naval review. The review was merely the defendant's purpose for chartering the boat, not a condition of the contract.
  • Allocation of Risk: The risk of the naval review's cancellation fell solely on Hutton, who contracted for the boat irrespective of the event's success. The plaintiffs' obligation was to provide the boat, not to ensure the success of Hutton's intended use.
  • Total Failure of Consideration: The court found that there was not a total failure of consideration. Hutton received part of the benefit (i.e., the boat's availability) but failed to perform his obligation (payment).
Distinction from Krell v Henry (Comparison): The case is directly contrasted with Krell v Henry, which involved a contract to rent a room specifically to view the coronation procession. In Krell, the procession's cancellation was held to frustrate the contract because the procession was the very foundation of the contract. In Herne Bay, the naval review was merely the defendant’s purpose and not the foundation of the contract. The Cynthia's availability was the essential element.
Key Legal Principles Illustrated:
  • Frustration of Contract: Frustration occurs when an unforeseen event renders the performance of a contract impossible or radically different from that originally contemplated. This case highlights that mere inconvenience or the defeat of the contracting party's commercial purpose does not constitute frustration.
  • Construction of Contracts: The court focuses on the literal terms of the agreement to determine its core obligations, as opposed to the parties' subjective intentions.
  • Allocation of Risk: Contracts implicitly allocate certain risks to the parties. In this case, the risk of the event being cancelled rested with Hutton.
Study Questions:
  1. What was the core obligation of each party in the contract?
  2. Why was Herne Bay distinguished from Krell v Henry? Explain the key difference in the contractual purpose in each case.
  3. How did the court determine whether there was a total failure of consideration?
  4. What is the significance of the phrase "perils of the sea, &c, permitting"? How does this relate to the allocation of risk?
  5. Explain the test for frustration of contract as applied in this case.
This study guide should help you thoroughly understand the Herne Bay Steam Boat Company v Hutton case and its implications for contract law. Remember to compare and contrast it with Krell v Henry to solidify your understanding of the principles of frustration.





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