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Lauritzen AS v Wijsmuller BV
This case, Lauritzen AS v Wijsmuller BV (also known as The Super Servant Two), centers on the doctrine of frustration in contract law. The core issue is whether the loss of one of two designated vessels, Super Servant Two, frustrated the contract for transporting a drilling rig. The court held that it did not. This guide breaks down the key concepts and reasoning.
I. The Facts:
Bingham LJ outlined key principles governing frustration:
The court found that the loss of Super Servant Two did not frustrate the contract for these reasons:
The court in Lauritzen AS v Wijsmuller BV demonstrated a cautious approach to the application of the doctrine of frustration. The availability of an alternative method of performance, coupled with the self-induced element of Wijsmuller's decision to not use Super Servant One, prevented them from successfully arguing frustration. This case highlights the importance of carefully considering the contract's terms and the absence of self-induced events when assessing a claim of frustration. The burden of proving frustration lies heavily on the party seeking to rely on
This case, Lauritzen AS v Wijsmuller BV (also known as The Super Servant Two), centers on the doctrine of frustration in contract law. The core issue is whether the loss of one of two designated vessels, Super Servant Two, frustrated the contract for transporting a drilling rig. The court held that it did not. This guide breaks down the key concepts and reasoning.
I. The Facts:
- Contract: Lauritzen (plaintiff) contracted with Wijsmuller (defendant) to transport a drilling rig from Japan to Rotterdam. The contract specified transport by either Super Servant One or Super Servant Two, at Wijsmuller's discretion.
- The Loss: Super Servant Two, the chosen vessel, was lost at sea.
- Wijsmuller's Action: Wijsmuller informed Lauritzen they couldn't use either vessel, effectively ending their performance.
- The Dispute: The central question was whether this constituted frustration, relieving Wijsmuller of liability for the additional costs incurred by Lauritzen in finding alternative transport.
Bingham LJ outlined key principles governing frustration:
- Mitigation of Rigor: Frustration mitigates the harshness of strictly enforcing contracts when unforeseen events make performance impossible or radically different from what was agreed. It's an exception, not a rule.
- Narrow Limits: The doctrine is applied restrictively and shouldn't be extended beyond its established boundaries.
- Automatic Termination: Frustration terminates the contract immediately and automatically. No further action is required.
- No Self-Induced Frustration: Frustration cannot be caused by the party seeking to rely on it. The event must be external and unforeseen.
- No Fault: The frustrating event must occur without fault or blame on the party invoking frustration.
The court found that the loss of Super Servant Two did not frustrate the contract for these reasons:
- Choice of Vessels: The contract gave Wijsmuller a choice of two vessels. The loss of one did not make performance impossible, as Super Servant One remained available. This follows the precedent set in Maritime National Fish Ltd v Ocean Trawlers Ltd.
- Self-Induced Element: Wijsmuller's decision not to use Super Servant One was a self-induced event, preventing them from relying on the doctrine of frustration. The contract would have continued had they chosen to use the remaining vessel. The loss of the ship was merely a factor, but the decision not to use the alternative vessel was the actual reason the contract failed.
- Davis Contractors Ltd v Fareham Urban District Council: This case provides the classical statement of the modern law of frustration, which is referenced and applied in Lauritzen. Understanding the principles from this case is crucial for grasping the reasoning in Lauritzen.
- Maritime National Fish Ltd v Ocean Trawlers Ltd: This case, cited by Bingham LJ, supports the finding that the availability of an alternative means of performance negates frustration.
The court in Lauritzen AS v Wijsmuller BV demonstrated a cautious approach to the application of the doctrine of frustration. The availability of an alternative method of performance, coupled with the self-induced element of Wijsmuller's decision to not use Super Servant One, prevented them from successfully arguing frustration. This case highlights the importance of carefully considering the contract's terms and the absence of self-induced events when assessing a claim of frustration. The burden of proving frustration lies heavily on the party seeking to rely on
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