PRORATING IN THE ENGLISH LAW OF FRUSTRATED CONTRACTS
| Date | 01 September 1968 |
| DOI | http://doi.org/10.1111/j.1468-2230.1968.tb01209.x |
| Published date | 01 September 1968 |
PRORATING IN THE E'NGLISH LAW
OF
FRIJSTRATED CONTRACTS
AN
as yet unresolved problem in the law of frustration is the legal
position of
a
trader who has entered into a number of contracts to
supply goods to customers prior to the occurrence of a prima facie
frustrating event which results in the trader not being able to per-
form all these contracts in full but leaves him able to perform either
some in full
or
all in part.
This
could arise where a merchant
undertakes to supply goods from a defined source to his cust0mers.l
Suppose this merchant has entered into contracts to supply
1,000
tons
of
the goods to each
of
five customers and, as a consequence
of
a
partial failure of supply, resulting from a crop failure
or
cattle
epidemic
or
an outbreak of hostilities, he only obtains a total of
1,000
tons to fulfil his commitments. Assuming that the circum-
stances of supply are perfectly well known to the customers and
accepted by them
as
basic to the agreement and that the merchant
is in no way at fault for having misled his customers
or
entering
into more contracts than he could reasonably have expected to fulfil,
what then, in the absence of a clearly applicable exemption clause,
is his position? One solution might be that he should apportion
200
tons apiece to each customer and, although a customer could
not be compelled to accept such a reduced quantity, the merchant
would be regarded as discharged from further liability.a Another
and much harsher solution would be to say that the trader should
perform one of his five contracts as he has sufficient goods to do that
and in respect of the
four
other contracts be liable for breach
of
contract on the footing
of
self-induced frustration, since his own act
or
election in allocating all the goods to one amongst the contracts
was the immediate cause of his not being able
to
perform the others.s
1
See
Tennants
v.
Wilson
[1917]
A.C.
495
(chemicals from Germany);
Pool
Shipping
V.
London
Coal
CO.
of
Gibraltar
[1938]
2
All
E.R.
432
('coal
to
come
from bunker depot in Gibraltar); the example baned on
Howell
v.
Coupland
(1876)
1
Q.B.D.
258
(pot,atoes
b
be grown
on
specified land) in
McElroy
and
William.~
on
Impossibility
of
Performnnoe
at
p.
240;
illostrations
to
5
464
of
the
Restatement
of
Contmcts
(cargo of specified vaasel and goods
.to
be
produced
in
a
specified factory).
2
McElroy and Williams,
op.
cit.
p.
241;
fiestatentent
of
Contracls,
5
464;
J
This wou,ld
follow
from
some
of
the language
in
Maritime
National
Fish
v.
Ocean
Trawlers
[1935] A.C.
894
at
p.
5'30:
''
It is immaterial to fipeculate why
they preferred to put forward
for
licerices the ,three trawlers which they
actually seleoted. Nor
is
it mat,erial,
as
between the appellants and the
resEmndents, that the appell,ants' were operating other trawlers
to
three
of
which they gave the preference.
.
. .
The essenc&,
of
frustration
is
that it
should not
bo
due
to
the
act
or
rlect'ion of the party. The appellants operated
five trawlers, oue
of
which they chartered from the respondents. They
allocated their three licences
to
vessel(8 other than the respondents' and claimed
U.C.C.,
8.
2-615
(b).
585
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