Ruling court House of Lords | ||
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Citation(s) [1942] UKHL 4, [1943] AC 32, [1942] 2 All ER 122 Similar Chandler v Webster, Krell v Henry, Davis Contractors Ltd v Fare, Moses v Macferlan, Taylor v Caldwell | ||
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1942] UKHL 4 also known as the Fibrosa case, is a leading English decision of the House of Lords on contract law and the doctrine of frustration.
Contents
Facts
Fibrosa, a Polish company, agreed to buy some machinery for £4,800 from Fairbairn, an English-based company. In July 1939, Fibrosa made a payment of £1,000 as part of the agreement. By September Germany had invaded Poland and Britain had declared war. Fibrosa attempted to get the payment back but Fairbairn refused arguing that the invasion frustrated the contract. Fibrosa brought an action against Fairbairn.
The lower courts held, taking as their authority Chandler v Webster [1904] 1 KB 493, that where a contract has been frustrated by a supervening event, "the loss lies where it falls", with the result that sums paid or rights accrued before that event are not to be surrendered, but that all obligations falling due for performance after that event are discharged. Consequently, the lower courts rejected Fibrosa's claim to recover the £1,000.
Judgment
The House of Lords found in favour of Fibrosa. Viscount Simon was critical of the Chandler case and found that it would only apply where there has not been any failure of the consideration. However, in the circumstances, there was a failure of the consideration as Fibrosa had not received any part of the machinery that was ordered in exchange for the payment. Consequently, the frustrated contract would not follow the rule in the Chandler decision and so Fibrosa could collect.
Lord Wright said the claim was based on unjust enrichment.