The
English case of
Taylor v Caldwell established the doctrine of frustration, alleviating the potential harshness of "
sanctity of contract". Here, two parties contracted on the hire of a
music hall, for the performance of concerts. Subsequent to contract, but prior to the dates of hire, the music hall burned down. Since the contract was impossible to perform,
Judge Blackburn held that the absolute liability set forth in
Paradine v Jane would not apply here, as there was an
implied term that the music hall would be in existence at the date of the planned concerts. The requirement of "impossibility" in
Taylor v Caldwell was modified in the 1903 case of
Krell v Henry, which concerned a party who had rented a room for the purpose of watching the
coronation procession of
Edward VII. The king fell ill and the coronation was indefinitely postponed. The hirer refused to pay for the room, so the owner sued for
breach of contract; and the hirer then countersued for the return of his £25 deposit. The court determined that the cancellation of the coronation was unforeseeable by the parties, and discharged the contract, leaving the parties as they were: the hirer lost his one-third deposit, and the owner lost the rest of the rent. The court reasoned that the doctrine of "impossibility" could not be applied in this case because it was technically possible for the hirer to take possession of the flat and sit on the balcony. However, the owner knew the only reason the hirer would want to rent the flat was to watch the procession; had the hirer actually gone to the flat and sat on the balcony, he would have seen nothing of interest. Thus, the purpose of the contract had been frustrated by an outside event (the King's illness and consequent cancellation of the parade), justifying termination (but not rescission) of the contract. ==In Australian law==