Krell v. Henry

[1903] 2 K.B. 740 (C.A.)

Court of Appeal (England and Wales) · 1903

Rule

Where the principal purpose of a contract is frustrated by a supervening event not the fault of either party and not within the risks the parties allocated, performance is excused. Frustration of purpose differs from impossibility: performance remains possible, but its value has evaporated.

Learning outcomes

By the end of working with this case, you can:

Facts

Henry agreed to rent rooms in Krell’s London flat overlooking Pall Mall for two days. The rental coincided with the planned coronation procession of Edward VII, which would pass beneath the windows. Neither the written agreement nor the negotiations referred to the coronation, but both parties understood the rental’s purpose. The King fell ill and the procession was canceled. Henry refused to pay the balance owed; Krell sued.

Holding

The Court of Appeal held that the contract was discharged by frustration. Henry was not liable for the balance.

Reasoning

Vaughan Williams L.J. extended the principle of Taylor v. Caldwell to circumstances in which the subject of the contract still existed (the rooms were available) but the foundation of the bargain had been removed. The rooms had a fair market value as accommodation, but the parties had bargained for a specific purpose, the viewing of the procession, which was so central that the contract could not reasonably be carried into effect without it. With the procession canceled, the purpose was frustrated. Neither party was at fault; the risk had not been allocated by the contract; the proper consequence was discharge.

Why it matters

Krell v. Henry is the leading frustration-of-purpose case in the common law. It distinguishes itself from impossibility: performance is still possible, but the bargain has lost its essential value to one side. The doctrine, now codified at Restatement (Second) § 265, remains narrowly applied; courts demand that the frustrated purpose be principal, mutually understood, and not within the risks the parties accepted. The case is taught alongside Taylor v. Caldwell and Transatlantic Financing to draw the lines among related excuse doctrines.

The trap

Conflating frustration with impossibility. In Krell, performance was still possible. The rooms were available; Henry could have occupied them. The doctrine reaches the gap between what the contract can DO and what the contract IS FOR. Students who fold frustration into impossibility miss the case's central move and cannot extend the doctrine to fact patterns where the subject matter survives but the purpose collapses.

The operational intuition the case is designed to break. Naming the trap is what the Socratic exchange is for.

Socratic ladder

The professor's scaffold for the in-class exchange. Each rung is a stage; the questions are scripted prompts, not the punchline.

Surfacing · 45 sec

Q. Henry rents rooms in Krell's Pall Mall flat for two days at a high price. Neither the writing nor the negotiations mention it, but both parties understand the rental is for watching King Edward VII's coronation procession pass beneath the windows. The King falls ill. The procession is cancelled. The rooms are still available. Henry refuses to pay the balance. Operationally, should he have to pay?

Look for: The split. Some students focus on the writing (silent on coronation, so Henry owes). Some focus on the shared understanding (purpose gone, so Henry walks). Both intuitions are on the table.

Holding · 45 sec

Q. What did the Court of Appeal hold?

Look for: Henry discharged. The contract was discharged by frustration of purpose. Performance remained possible but the foundation of the bargain had been destroyed.

Reasoning · 120 sec

Q. The rooms were still rentable. Henry could have used them. Why does the court let him out?

Trap: Students conflate frustration with impossibility. Performance remained possible. The court is doing something new: protecting the shared purpose that animated the contract, not the physical capacity to perform.

Board: R2d § 265: principal purpose substantially frustrated by a basic-assumption event.

Push back: What did both parties know about why the rooms were being rented? What does the high price tell you about whether the coronation was incidental or central?

Push to: Frustration of purpose. R2d § 265 codifies the modern test: (a) the purpose was a basic assumption of the contract, (b) the supervening event substantially frustrated that purpose, (c) the event was not the obligor's fault, (d) the obligor did not bear the risk under the contract. The price premium and the location are evidence that coronation viewing was the principal purpose, not a side benefit.

Hypothetical · 90 sec

Vary. The procession is not cancelled outright. It is postponed by one week. Henry still has the rooms rented for the original two days. Discharge or no?

Point: Temporary frustration. R2d § 269 governs: discharge can be partial or proportional. The rooms had value during the original window only because of the procession; the postponed event makes the rental period worthless. Tests whether students see that frustration can attach to a time-specific purpose even when the purpose is eventually realized.

Integration · 60 sec

Q. Modern event-rental contracts (weddings, conferences, sports hospitality) carry detailed force-majeure and refund clauses. Why, if Krell already gives the customer a default? And is frustration of purpose a rule the common law had to invent, or could it have been carried by an expanded impossibility doctrine?

Land: Frustration of purpose as the doctrinal seam between impossibility (no performance possible) and bad-bargain regret (performance possible but no longer wanted). The doctrine remains narrow: the frustrated purpose must be principal, mutually understood, and not within the risks the contract allocated. Krell sits with Taylor and Transatlantic as the trio that maps the excuse doctrines.

Krell v. Henry, [1903] 2 K.B. 740 (C.A.).