BANK LINE, LIMITED. APPELLANTS; AND ARTHUR CAPEL AND COMPANY RESPONDENTS [HOUSE OF LORDS.] [1919] AC 435 HEARING-DATES: 12 December 1918 12 December 1918 CATCHWORDS: Ship - Charterparty - Impossibility of Performance - Time Charter - Requisition by Government - Frustration of Adventure. HEADNOTE: The principle of frustration of the adventure applies to a time charter. By a charterparty of February 16, 1915, the defendants agreed to let a steamer t o the plaintiffs, the charterers, for twelve months from the time the vessel sho uld be delivered and placed at the disposal of the charterers at a coal port in the United Kingdom as ordered by the charterers, to trade between safe ports wit hin certain specified limits. The charterparty excepted loss or damage arising f rom restraints of princes. It also provided (1.) (clause 26) that, should the st eamer not have been delivered on April 30, 1915, the charterers should have the option of cancelling the charter, and that, should it be proved that the steamer through unforeseen circumstances could not be delivered by the cancellin g date, the charterers, if required, should, within a prescribed time after rece iving notice thereof, declare whether they would cancel or take delivery; (2.) ( clause 31) that the charterers should have the option of cancelling should the s teamer be commandeered by the Government during the currency of the charter. The steamer was not delivered on April 30, and on May 11, before delivery, the stea mer was requisitioned by the Government, but the plaintiffs did not exercise the ir option to cancel. In August the defendants agreed to sell the steamer to thir d parties conditionally on obtaining her release from the Government, and the Go vernment consented to release the steamer on being provided with a substitute. T he ship was released in September and the sale was effected. The plaintiffs clai med damages for non-delivery of the steamer:Held: (1.) that the application of the principle of frustration was not excluded by the special terms of the charterparty; (2.) (by Lord Finlay L.C., Lord Shaw of Dunfermline, Lora Sumner, and Lord Wrenbury; Viscount Haldane dissenting) tha t the requisition and detention of the steamer destroyed the identity of the cha rtered service and entitled the defendants to treat the charterparty as at an en d. The principle of frustration discussed by Lord Sumner. Decision of the Court of Appeal reversed. INTRODUCTION: APPEAL from an order of the Court of Appeal reversing a judgment of Rowlatt J.

The appellants were the owners of the steamship Quito, and the respondents were the charterers of that vessel under a time charterparty dated February 16, 1915. The question for decision was whether, as the result of the requisitioning of t he Quito by His Majesty's Government, after the date of the charterparty, but be fore the vessel had actually entered on her service thereunder, the adventure co ntemplated by the charterparty became frustrated and the contract terminated. The facts are fully stated in the judgment of the Lord Chancellor. The action wa s brought by the charterers for a declaration that the charterparty was not diss olved by the ship's having been requisitioned and that the owners were bound to deliver her to the charterers. Rowlatt J. held that the effect of the requisition was to put an end to the char terparty. The Court of Appeal, by a majority (Pickford and Warrington L.JJ.; Scrutton L.J. dissenting), reversed the decision of the learned judge and gave judgment for t he plaintiffs for 13,344l., the amount of the damages provisionally assessed by the judge. COUNSEL: Nov. 14, 15. MacKinnon K.C. (with him Raeburn) for the appellants. A contract made in February between a shipowner and a charterer for chartering a ship for twelve months from April is so materially different from a contract fo r chartering the ship for twelve months from September that the whole substratum of the contract is gone and the parties are relieved from their respective obli gations thereunder. The question does not depend upon any provision as to giving notice of cancellation, which comes to an end with the rest of the contract. Th e effect of such a radical change in the conditions of the contract is that the contract dies. Leck K.C. and Robertson Dunlop (Sir Robert Aske with them) for the respondents. On the terms of this charterparty it is impossible to imply a condition that the requisition of the ship avoided the contract. The owners remain under the expli cit obligation to place the ship at the charterers' disposal, but under clause 2 6 the charterers have an option to put an end to the contract. That clause does away with the doctrine of frustration from causes provided for by the clause, an d so far as this case is not covered by clause 26 it is covered by clause 31, wh ich has the same effect as to commandeering as clause 26 has to all other cases of delay. So long as the vessel is in existence it is possible for the owners to perform their contract. No term can be implied which is inconsistent with the e xpress terms of the contract. Upon any view of the contract the owners have fail ed to show any frustration in fact. This was not a contract for delivery at any particular date; it remained what it always was - a contract for the hire of the ship for twelve months from the time when the ship was delivered. They referred to Tamplin Steamship Co. v. Anglo-Mexican Petroleum Products Co. n (1) and Metropolitan Water Board v. Dick, Kerr & Co. n(2)

n(1) [1916] 2 A. C. 397, 403. n(2) [1918] A. C. 119. 129, 132-3.

Raeburn in reply. There is no inconsistency between the express terms of the contract and frustrat ion by long delay. Clause 26 was inserted to enable the charterers to take advan tage of a short delay, and does not imply that the owners must hold the steamer at the disposal of the charterers for an indefinite period. The same remarks app ly to clause 31. Scottish Navigation Co. v. Souter & Co. n(1) shows that there m ay be an implied term for putting an end to the contract on the ground of frustr ation, notwithstanding an express provision dealing with the same subject. "The mere introduction of exceptions or stipulations dealing with certain contemplate d contingencies ... is not of itself sufficient to indicate an intention to excl ude the implied condition": Per Bankes L.J.; and see M'Andrew v. Adams. n(2) On the question whether there was a frustration in fact the principle laid down by Scrutton J. in Embiricos v. Sydney Reid & Co. n(3) applies - namely, that commer cial men are not obliged to wait till the end of a long delay to find out from w hat in fact happens whether they are bound by a contract or not, but are entitle d to act on reasonable commercial probabilities at the time when they are called upon to make up their minds. The House took time for consideration. Dec. 12, 1918. PANEL: LORD FINLAY L.C., VISCOUNT HALDANE, LORD SHAW OFDUNFERMLINE, LORD SUMNER, and LORD WRENBURY JUDGMENTBY-1: LORD FINLAY L.C JUDGMENT-1: LORD FINLAY L.C: My Lords, in this case an action was brought by Messrs. Capel & Co., the respondents, against the Bank Line, Limited, the appellants, to recove r damages for failure by the defendants to put at the disposal of the plaintiffs the steamship Quito, which the plaintiffs had chartered from the defendants for a period of twelve months. The points of defence allege that the vessels had be en requisitioned by the British Government, and that the charter was put an end to by such requisitioning from its date, May 11, 1915. The case was tried by Rowlatt J., who held in favour of the defendants that the requisition had put an end to the contract.

n(1) [1917] 1 K. B. 222, 247. n(2) (1834) 1 Bing. N. C. 29. n(3) [1914] 3 K. B. 45. 54. On appeal the majority of the Court of Appeal (Pickford and Warrington L.JJ.) re versed this decision. Scrutton L.J. dissented, and expressed his agreement with the conclusion arrived at by Rowlatt J. The Bank Line, Limited, have now appealed to this House, and ask that the judgme nt of Rowlatt J. should be restored. The charter is dated February 16, 1915, and was entered into between the appella nts, owners of the Quito, and the respondents, the charterers. By the first clau se the owners agreed to let, and the charterers to hire, the steamer for a term of twelve calendar months from the time the vessel should be delivered and place d at the disposal of the charterers ready to load at a coal port in the United K

ingdom as ordered by charterers to be employed in trade between safe ports and p laces within the limits of the United Kingdom, France, the Bay of Biscay, Portug al, Spain, and the Mediterranean not east of Sicily during the war. By the fifth clause the charterers were to pay as hire 2919&L per calendar month , commencing from the time the steamer was placed at their disposal. By the four teenth clause it was provided that throughout the charter losses or damages, whe ther in respect of goods carried or to be carried, or in other respects, should be absolutely excepted if they arose from certain causes enumerated, among which were the act of God, perils of the sea, and arrests and restraint of princes, r ulers, and peoples. The two most important clauses for the purposes of the present appeal are the tw enty-sixth and the thirty-first, which run as follows:26. "That the steamer shall be delivered under this charter not before April 1, 1915, and should the steamer not have been delivered latest on the 30th day of A pril, 1915, charterers to have the option of cancelling this charter. "That should it be proved that the steamer, through unforeseen circumstances, ca nnot be delivered by the cancelling date, charterers, if required, shall within forty-eight hours after receiving notice thereof declare whether they cancel or will take delivery of the steamer." 31. "Charterers to have option of cancelling this charterparty should steamer be commandeered by Government during this charter." The vessel was not ready by the cancelling date (April 30, 1915), but the respon dents did not exercise their option of cancelling, nor were they invited to say whether they would cancel or not. The Quito went into dry dock at Hull to prepar e for entering upon service under the charterparty, and while there she was, on May 11, requisitioned by the British Government. Efforts were made by the charte rers and owners to get her released, but without success. On May 17 the chartere rs wrote that they had informed the owners that they would take the steamer on h er original charter on the same conditions for twelve months, if tendered to the charterers any time within the next three months, but no agreement was arrived at as to this suggestion. The efforts to get the vessel released ceased early in June, 1915, and there was no further communication between the parties on the s ubject until September 3, 1915. On this last day the charterers, who had heard t hat the owners were selling the Quito, having got the Government to release her, called upon them to deliver the steamer under the charter. The owners replied o n the same day that in their view the charter had long since become inoperative, as the owners were prevented from tendering the steamer within the exceptions i n the charter, and added that the request that the owners should tender the stea mer seemed to ask them to enter into an entirely new agreement, and not such as was contemplated by the charter of February 16. The facts were that in July, 1915, the appellants had received from third partie s an offer to purchase the Quito which on August 11 they accepted, subject to th eir being able to procure her release from the requisition. On August 17 the Gov ernment intimated that they would release the Quitoprovided the owners replaced her by another vessel of theirs - the Mansuri - which was free of engagements, a nd on September 2 this was carried out and the Quito was released. The appellants contend that they were not liable in the action, on the ground th at they were entitled to treat the charterparty as at an end owing to the requis ition by the Government, and the detention under it, as this amounted to a frust

ration of the adventure by circumstances beyond the appellants' control. The res pondents urged that on the construction of the charterparty all application of t he doctrine of frustration was excluded, and denied that there was in fact any f rustration of the adventure. Rowlatt J. and Scrutton L.J. held that the charterp arty was at an end, the adventure having been frustrated; while Pickford L.J. an d Warrington L.J. held that the charterparty was still in existence, and awarded the plaintiffs damages on a scale which worked out at 31,000l. The doctrine that a contract may be put an end to by a vital change of circumsta nces has been repeatedly discussed in your Lordships' House, and most recently i n the case of the Metropolitan Water Board v. Dick, Kerr & Co. n(1) , in which a great number of cases were reviewed. I do not propose to repeat what has been s aid in these cases on the law of the subject, which is well settled, and proceed at once to consider the application of the doctrine to the circumstances of the present case. The first question that falls to be determined is whether, as contended by the r espondents, the doctrine of frustration of the adventure as terminating the cont ract is excluded by the terms of the charterparty. The clauses relied on as havi ng this effect are clauses 26 and 31. In my opinion neither of these clauses can have the effect of preventing the termination of the charterparty by the requis ition in the present case and the detention under it. The twenty-sixth clause provides that if the steamship should not have been deli vered by the end of April, 1915, the charterers were to have the option of cance lling the charter. This option would apply, if there were any delay

n(1) [1918] A. C. 119. beyond April 30, and if the delay was through unforeseen circumstances (in other words, if it was not due to the default of the owners) it was provided by the s econd paragraph that the charterers might be called on to declare within forty-e ight hours whether they cancelled or would take delivery of the steamship. It wa s urged for the respondents that this clause meant that only the charterers coul d cancel in case of non-delivery, and that however long the owners might have be en prevented from delivering by unforeseen circumstances beyond their control, t hey were bound to hold the vessel at the disposal of the charterers. I cannot re ad this clause as having any such effect. The charter was to be for twelve month s from delivery, which the owners were to make by the end of April unless preven ted by unforeseen circumstances, in which case-the charterers had the option of cancelling, however short the delay. If, owing to unforeseen circumstances, it b ecame impossible for the owners to deliver under the charterparty until many mon ths after the end of April, the whole character of the adventure would be change d. A charter for twelve months from April is clearly very different from a chart er for twelve months from September. In such a case the adventure contemplated b y the charter is entirely frustrated, and the owner, when required to enter into a charter so different from that for which he had contracted, is entitled to sa y "non h'c in foedera veni." In other words, the owner is entitled to say that t he contract is at an end on the doctrine of the frustration of the adventure as explained in Tamplin Steamship Co. v. Anglo-Mexican Petroleum Products Co. n(1) It would be quite unreasonable to construe clause 26 as meaning that the owners are in such a case to hold the vessel at the disposal of the charterers for an u nlimited period. In the Tamplin Steamship Co. Case n(1) the House of Lords was divided three to t wo, Lord Loreburn, Lord Parker, and Lord Buckmaster L.C. (who concurred with Lor d Parker's judgment) forming the majority, while Lord Haldane and Lord Atkinson dissented. But it will be found that the

n(1) [1916] 2 A. C. 397. principles of law enunciated by Lord Loreburn and by the two dissentients are id entical; the difference between them being as to the application of these princi ples to the particular circumstances of the case. The concurrence of Lord Parker and of Lord Buckmaster L.C. with Lord Loreburn was to some extent rested on the ground that a clause in the charter providing for the case of restraint of prin ces would exclude the doctrine of frustration of the adventure as terminating th e contract. This proposition should not, in my opinion, be regarded as forming p art of the judgment of the House, and the judgment of Lord Parker when scrutiniz ed will be found to treat this as only one of the circumstances which led him to the conclusion that in the case of the time charter which was in question the d octrine of frustration was excluded Clause 31 cannot be relied on on behalf of the respondents any more than clause 26. Clause 31 merely means that in case of the vessel being commandeered, the ch arterers might cancel at once without having to show that the detention was like ly to last so long as to put an end to the contract within the meaning of the au thorities. The second question must, therefore, be determined - namely, did the requisition of the vessel and the detention under it constitute a change of circumstances s uch as to entitle the owners to treat the charter as at an end? As events show, the release of the vessel could he procured by providing another instead, but th ere was no obligation on the owners to do this for the purpose of carrying out t he charter. It was only after they had entered into the contract to sell the Qui to conditionally on procuring her release that the owners provided a substitute to enable them to carry out their contract of sale. The entering into the contra ct of sale was an act showing that the owners treated the contract of charter as at an end. Were they justified in this? In my opinion they were. They had concu rred with the charterers in endeavouring to procure the release by the Admiralty of the vessel. These efforts failed, and were not continued after June 8. On Se ptember 3 the charterers learned of the release which had been obtained by the s ubstitution of the Mansuri in order to carry out the sale of the Quito, and demanded delivery. In m y opinion the owners were entitled to reply as they did, that the contract had c ome to an end as the detention had lasted so long that if the vessel were delive red in September it would be on a contract differing most materially from that p rovided for by the original charter. For these reasons I agree with the conclusion arrived at by Rowlatt J. and Scrut ton L.J., and think that the appeal should be allowed with costs here and below. JUDGMENTBY-2: VISCOUNT HALDANE JUDGMENT-2: VISCOUNT HALDANE: My Lords, in this case there are two questions: Is the doctrin e of what is called frustration excluded under the circumstances by the effect o f the special stipulations in the charterparty? The stipulations I refer to part icularly are those in clause 14, excepting loss or damage by restraint of prince s; that in clause 26, providing for delivery under the charterparty by a certain date, and giving the charterers an option to cancel in the case of such deliver y not taking place, and also in the case of being notified of unforeseen circums tances making delivery impossible; and clause 31, giving the charterers an optio n to cancel should the steamer be commandeered during the currency of the charte rparty. If this question be answered in the negative, and it is held that the do

ctrine of frustration is applicable, was there in point of fact what amounted to frustration? My Lords, I do not think that there is anything in the charterparty which exclud es the doctrine of frustration if the circumstances proved at the trial amount i n law to so much. As to the meaning of the principle I have reconsidered what wa s said by Lord Atkinson and myself in Tamplin Steamship Co. v. Anglo-Mexican Pet roleum Products Co. n(1) I see no reason to depart from what he and I agreed in stating to be the principle, and I do not think that Lord Loreburn said anything really different. Whether, in accordance with the modern tendency, the question is treated as one of construction, and an exception is formulated as implied, o r whether, as appears to have been the real ground of the

n(1) [1916] 2 A. C. 397. judgments in Baily v. De Crespigny n(1) , the question is regarded rather as one of a common mistake, consisting in the present instance in the assumption that the steamer was one which could be made available, does not matter. What is clea r is that where people enter into a contract which is dependent for the possibil ity of its performance on the continued availability of the subject-matter, and that availability comes to an unforeseen end by reason of circumstances over whi ch its owner had no control, the owner is not bound unless it is quite plain tha t he has contracted to be so. And such cases as Geipel v. Smith n(2) and Jackson v. Union Marine Insurance Co. n(3) show that the application of the principle t o a charterparty is not excluded by the circumstances that the contract contains an express exemption clause covering what is matter not fundamental in the same sense, loss or damage from restraint of princes. The second question is whether in this case what happened amounted to a complete frustration of the adventure. The contract, which was dated February 16, 1915, was for the use of the steamer for twelve months, not from any particular date, but from the time when she should be delivered to and placed at the disposal of the charterers at a coal port to be designated by them. Under clause 26, already referred to, the delivery was to take place not before April 1, and if it did n ot take place at latest on the 30th of that month the charterers were to have th e right to cancel the charterparty. By clause 31 the charterers were expressly g iven the option to cancel if the steamer should be commandeered by the Governmen t during the charter. I think that this shows that such commandeering was contem plated by the parties as an event which would not necessarily put an end to the basis of their contract, but might merely delay or interrupt the employment of t he vessel. In April the steamer was on a voyage from New York to Rotterdam, and was delayed beyond April 30, the date at which the charterers had an option to cancel. It w as not

n(1) (1869) L. R. 4 Q. B. 180. n(2) (1872) L. R. 7 Q. B. 404. n(3) (1874) L. R. 10 C. P. 125. until May 7 that she reached Hull, the port designated by the charterers under t he contract, and she had to be dry docked for repairs until May 17. On the 10th of that month the Admiralty intimated that they would requisition one out of sev eral ships belonging to the appellants. The latter indicated that the Quito, the

steamer in question, was most readily available, but that she was under charter to the respondents. The Admiralty thereupon, on May 11, requisitioned her. The respondents then urged the Admiralty to release the Quito, on the ground that sh e was to be used for supplying France with coal, and the appellants appear to ha ve supported the application. Both parties seem to have contemplated that the re quisition might not prove a prolonged one, and that the charterparty might still be capable of being put into operation. My Lords, I have read the correspondence between the parties which followed on t he requisition. In accordance with a well-known rule of construction which lays down that a series of letters must be read as an entirety when it is desired to ascertain whether there was a final consensus, it is not right to pause over phr ases subsequently superseded, with a view to picking out an agreement while the matter is continuing in the stage of negotiation. Reading the letters with this rule in mind, I think that their outcome, taken in conjunction with the oral evi dence, was that although on May 17, 1915, Mr. Scott, as representing the respond ents, writes to his brokers that he had informed the appellants that he would on ly take the steamer on her original charter on the same conditions for twelve mo nths, if she was tendered at any time within the next three months, nothing came of the suggestion. It is clear that in the subsequent correspondence the partie s had in their minds that the requisition had not so far put an end to the chart er. Mr. Niven, who represented the appellants, appears from his evidence, given in cross-examination, to have thought that he could have got the Quito released at any time by offering the Admiralty another steamer. In the end, in August, he succeeded in this, but he did not make a definite attempt until he found that he could sell the Quito to a stranger. I agree with the opin ion of Pickford L.J. that the parties never did take the view that the requisiti on had either been so long, or would necessarily be so long, as to put an end to the charter. It must be borne in mind that the term was twelve months, not from a definite date, but from the date when the steamer was delivered to the charte rers, and that they intended to use her for the carriage of coal across the Chan nel, a use which they could put her to at any period that was likely to call for it. It appears that the owners never asked the charterers to say whether they w ould cancel under the clause in the charterparty, or would take delivery of the steamer after release by the Admiralty. Nor did they intimate that the charter w as in their opinion at an end, but they left the charterers to await advice from them as to the prospect of the vessel being released. When, on September 2, the Quito was released by the Admiralty to her owners, who had nearly a month previ ously sold her to an outside purchaser, the release was, it is quite true, obtai ned only for the purpose of the sale, and on condition of substituting another s teamer to go under requisition. The appellant owners were not bound to offer suc h a substitution in order to carry out their bargain with the respondent charter ers, but I think the character of the new transaction is relevant to the questio n whether at this period, or earlier, the appellants considered the requisition to be a necessarily enduring one. If not, I think that, under the terms of the c harterparty, it was for the respondents to decide whether the transaction was on e which they would wholly abandon or go on with it. My Lords, whether frustration has taken place is always a question which depends on the circumstances to which the principle is to be applied, rather than upon abstract considerations. I think that this is illustrated by what was decided in this House in the recent case of Metropolitan Water Board v. Dick, Kerr & Co. n (1) and in the other authorities then examined. On the facts before us I am unab le to come

n(1) [1918] A. C. 119.

to the conclusion that the appellants have succeeded in showing that the steamer was in point of fact, or was contemplated as being, under permanent requisition of such a character as to make the terms of the charterparty wholly inapplicabl e. She was required by the charterers for a cross-Channel coal traffic, in which she could apparently have been employed at any date, and although the charter w as a time charter, the date of its commencement was not precise. The use to whic h the vessel was to be put was not in point of fact a use of such a nature that it was frustrated by what happened, and I do not think that the parties at any t ime came to the conclusion that the prospect of such use was gone. There was the refore, in my opinion, no frustration in fact; and, having regard to the nature of the contract, no frustration in law either. I agree with the conclusions arri ved at by Pickford and Warrington L.JJ., and I think that the appeal ought to fa il. JUDGMENTBY-3: LORD SHAW OF DUNFERMLINE JUDGMENT-3: LORD SHAW OF DUNFERMLINE: My Lords, the facts of the case have been placed befor e the House in the address of the Lord Chancellor. The Quito was on May 11, 1915 , requisitioned by the Government, and was thus by departmental action, the lega lity of which is not challenged, taken from the service of the parties and place d in the service of the State. This action arose in consequence of the exigencie s of war. The vessel was then the subject of the charterparty quoted, and that c ontract I view entirely from the standpoint taken by Scrutton L.J. In substance she was chartered for twelve months - April, 1915, to April, 1916. When the comm andeering by the Government took place, the charterers could there and then have cancelled the contract under s. 31 and this even although the commandeering had only been for a month. But it was a general requisition, that is to say, the ship might under it be put into the service of the Government for years, and remain in it until to-day. In those circumstances the parties, nonplussed as to the effect of the action of t he Crown upon their own business arrangements with regard to the ship, would naturally be desirous to pause for a little before def initely treating the contract of affreightment as at an end. In my opinion this was exactly what they did. They agreed to wait for three months. That three mont hs expired on August 11. By that time the vessel had not been released, and on t hat date it appears to me that both parties were free from their temporary arran gement and that their rights are to be determined on the footing that the transf er of the ship to the service of the Government was for an indefinite period. In those circumstances I will venture to cite Horlock v. Beal. n(1) In that case the disablement (from carrying on a contract of service by the seamen) arose fr om the declaration of war and the consequent detention of the ship in a foreign port. But it was strongly contended that this did not release the parties from t heir contract, because nobody could predict whether the interruption would be fo r anything more than such a short period as might allow the contract to be resum ed. On that topic - the topic of frustration - if I may quote my own address, I said that n(2) "stoppage and loss, having arisen from a declaration of war, must be considered to have been caused for a period of indefinite duration, and so to ha ve effected a solution of the contract arrangements for and dependent upon the c ompletion or further continuance of the adventure." And I added: "I do not think that any other rule would be in accord with law, or would work. When a ship is put under detention by a declaration of war, I cannot see room for a condition o f affairs which would leave parties in suspense, and feeling that they are bound if the war be short but free if the war be long." The majority of the House too k this view. The case had reference to a contract of service during the performa

nce of a contract of affreightment; a fortiori, the same doctrine would apply to that contract itself. And I cite it because it appears to me that the rule or p rinciple there set forth applies in identical terms as well to the case of a dec laration of war as to the requisition of the

n(1) [1916] 1 A. C. 486. n(2) Ibid. 507, 508. ship by reason of the exigencies of war, and for an indefinite time, as in the p resent case. In the recent cases, my Lords, I have observed that several learned judges have expressed an opinion to the effect that notwithstanding the indefinite suspense to which I have referred, yet nevertheless the contract shall continue binding u nless both of the parties shall consent to the contrary. I can give no assent to such a doctrine. There may be many cases in which it would be greatly to the ad vantage of one party that he should have an indefinite, and it may be a prolonge d, hold over the other till performance shall become possible. In my opinion it would be contrary to all sound principle to overlay the effect of the suspense r eferred to by the necessity of having a consent on both sides to cancellation. N o such consent appears to me to be required. I desire further to add that the fa ct that the contract of affreightment is a voyage charter or a time charter make s no difference in the application of the principle, and that I attach my specia l assent to the judgment of my noble and learned friend Lord Sumner upon that to pic. With these observations I beg to express my entire concurrence in the opinion an d judgment just delivered from the Woolsack. JUDGMENTBY-4: LORD SUMNER JUDGMENT-4: LORD SUMNER: My Lords, whichever way this case is decided on the facts, it is ce rtainly a very near thing. From the time when the Quito was requisitioned her owners never were in a positi on to put her at the charterers' disposal for any purpose until after they had s old her. By finding a substitute for her they might possibly have induced the Ad miralty to set her free, for such things had been done; but it was uncertain if such an attempt would succeed, and mere importunity proved unavailing. They had not contracted to make this special effort for the benefit of the charterers. It is true that, when they did so for their own benefit, they succeeded, and havin g got possession of her, they might have been bound to place her at the chartere rs' disposal under the charter, if that still subsisted, the sale notwithstandin g; but the question is whether the charter had previously come to an end by frustra tion. If it had, they were not bound to give the charterers a first chance of a new contract. What then was the nature of the charter? It was not in form an April to April ch arter, but it was sufficiently so in substance. If the ship had been placed at t he disposal of the charterers when released by the Admiralty, she would virtuall y have been in their hands for a September to September hiring. The mere change in the initial month of the actual hiring is not quite the point, for this is no t the old comparison of a summer with a winter voyage. In either case she would have been on hire for each month of the twelve, and the exact cycle of the seaso

ns would make little difference to her. What is important is this. During all th e months of the Quito'sservice for the Admiralty the charterers would not in the least know when, if ever, they would have her on their hands. They could not te ll whether they might suddenly have to find employment for her, or whether they must make provision for the current necessities of their trade without counting upon her at all. In one respect they would be at an indubitable disadvantage. Th e postponement of the beginning of her hire at any rate brought nearer the end o f the war, after which the charterers would have to pay war rates for the ship a nd only have the use of her in peace employment. In the latter respect the owner s' position also would be one of indecision, for their business is one that requ ires that they should look ahead, and in doing so they could not tell when, if a t all, they were to have the Quito once more on offer. These uncertainties in co mmerce are very serious. Scrutton L.J. asked himself if the September to Septemb er employment would be in substance the same employment as that from April to Ap ril. I agree with him that it would not; and I think that the uncertainties of t he intervening period in time of war both emphasize the difference between the t wo and add to the gravity of the lapse of time taken by itself. We find the parties themselves apparently impressed with the idea that any long suspense was intolerable, and that, if the ship could not be promptly released, the engagement must be considered as at an end. Their communications with one another ceased ea rly in June; apparently each was waiting to see if something would turn up. So I read their correspondence. The charterers' agent actually spoke to the owners' representative in the sense that, if the Quitowas to be released, he would be pr epared to consider a new charter, and although the brokers deprecated what he ha d done, it was not so much that they differed from him in thinking that the old charter was dead as that they thought it better not to say so except without pre judice. The owners left the matter there, but presently they sold the Quito. The y did so without communication with the charterers. It is more reasonable to ref er that they also thought the old charter was dissolved than that, thinking it t o be alive, they hoped to escape disputes with the charterers by trying to keep secret what they were doing. One matter I mention only to get rid of it. When the shipowners were first appli ed to by the Admiralty for a ship they named three, of which the Quito was one, and intimated that she was the one they preferred to give up. I think it is now well settled that the principle of frustration of an adventure assumes that the frustration arises without blame or fault on either side. Reliance cannot be pla ced on a self-induced frustration; indeed, such conduct might give the other par ty the option to treat the contract as repudiated. Nothing, however, was made of this in the courts below, and I will not now pursue it. What then is the legal bearing of these facts? The charter is a time charter, an d the principle of frustration was originally decided on a voyage charter. For s ome time it was thought that the frustration rule had no application to time cha rters, upon the ground that, if the shipowner's object is to receive chartered h ire, as probably it is, he does not care how much the charterer's adventures are frustrated so long as he is able to pay. This was the view both of Bailhache J. in the case of the Auldmuir's charter (Admiral Shipping Co. v. Weidner, Hopkins & Co. n(1) ), and of Sankey J.

n(1) [1916] 1 K. B. 429. 437. in that of the Dunolly (Scottish Navigation Co. v. Souter & Co. n(1) ); and thou gh the Court of Appeal reversed their decisions n(2) some colour was given to th eir view by the fact that the references in those charters to a "Baltic round" w

ere treated as giving them the characteristics of a voyage charter although they were charters for time. Sankey J. in terms said that the principle "is confined to cases where it can be inferred from the charter itself that it is a contract for a definite voyage, or a definite object contemplated at first by both parti es." His notion was that both must have had a common interest in an adventure an d one and the same object in view when contracting. "The only object which both must have known each had in view" and "the object of common contemplation" are t he expressions of Bailhache J. Atkin J. expresses the same opinion in Lloyd Roya l Belge Soci t Anonyme v. Stathatos. n(3) This way of looking at the contract fi xes attention on its subjective aspect and asks what was actually in two hard ba rgainers' minds. Objectively the question is what does the law impute to them as fair dealers and deem to have been their meaning, which, as we constantly see i n questions of construction, may be a very different thing. Again Bailhache J. s ays n(4) : "It seems to me impossible to apply the doctrine of frustration to a case where one of the parties to the contract is fulfilling his part of the cont ract according to its terms," either in the owner's case by letting the chartere r have the ship and leaving him to find a use for her or in the charterer's by p aying his hire punctually. To this I think Swinfen Eady L.J. n(5) gives the suff icient answer. "It is the further performance of the contract by one party which formed the consideration for the payment by the other, which has become impossi ble, and this effects a dissolution of the contract." Lawrence J. also says that in a time charter the owner's object is not only to get hire but to afford the services, which the

n(1) [1916] 1 K. B. 675, 681. n(2) [1917] 1 K. B. 222. n(3) (1917) 33 Times L. R. 390. n(4) [1916] 1 K. B. 438. n(5) [1917] 1 K. B. 237, 250. charterer pays for, although money is their common motive. Lord Parker of Waddin gton in Tamplin's Case n(1) drew attention to the difficulties attending on the adaptation of the doctrine to a time charter of long duration, which all must re cognize, but did not express the opinion that it was inapplicable to time charte rs as such, and it is now settled that, although the doctrine may have to be som ewhat specially applied, time charters do not fall outside the rule. Scottish Na vigation Co. v. Souter & Co. n(2) ; Admiral Shipping Co. v. Weidner, Hopkins & C o. n(3) ; Anglo-Northern Trading Co. v. Emlyn. Jones and Williams n(4) ; Countes s of Warwick Steamship Co. v. Le Nickel Soci t Anonyme n(5) ; and finally Metrop olitan Water Board v. Dick, Kerr & Co. n(6) are the authorities for this. All these are cases of delay arising out of the exigencies of the present war; a nd the length of the delay was especially dwelt on in the particular circumstanc es of Tamplin's Case. n(7) Bailhache J. says n(8) that the main thing to be cons idered is the probable length of the total deprivation of the use of the charter ed ship compared with the unexpired duration of the charterparty, and I agree in the importance of this feature, though it may not be the main and certainly is not the only matter to be considered. The probabilities as to the length of the deprivation and not the certainty arrived at after the event are also material. The question must be considered at the trial as it had to be considered by the p arties, when they came to know of the cause and the probabilities of the delay a nd had to decide what to do. On this the judgments in the above cases substantia lly agree. Rights ought not to be left in suspense or to hang on the chances of subsequent events. The contract binds or it does not bind, and the law ought to

be that the parties can gather their fate then and there. What happens afterward s may assist in showing what the probabilities really were, if they had been rea sonably forecasted, but when

n(1) [1916] 2 A. C. 397, 425. n(2) [1916] 1 K. B. 675, 681. n(3) [1917] 1 K. B. 222. n(4) [1917] 2 K. B. 78; [1918] 1 K. B. 372. n(5) [1918] 1 K. B. 372. n(6) [1918] A. C. 119. n(7) [1916] 2 A. C. 397. n(8) [1917] 2 K. B. 84. the causes of frustration have operated so long or under such circumstances as t o raise a presumption of inordinate delay, the time has arrived at which the fat e of the contract falls to be decided. That fate is dissolution or continuance a nd, if the charter ought to be held to be dissolved, it cannot be revived withou t a new contract. The parties are free. Again, it does not seem to be in itself a matter of crucial importance whether t he performance of the charter has begun or not. The charter in Jackson's Case n( 1) has often been wrongly referred to as purely executory (e.g., per Lord Watson in Dahl v. Nelson, Donkin & Co. n(2) ), but the ship was on her way to load and had begun the chartered voyage, which did not begin merely at the port of loadi ng. Blackburn J.'s remarks in Geipel v. Smith n(3) raised a doubt which was also present to the mind of Lord Parker of Waddington in Tamplin's Case n(4) , but I think that Bensaude v. Thames and Mersey Marine Insurance Co. n(5) disposes of it. See Embiricos v. Sydney Reid & Co. n(6) Of course it may be very material in considering the prospect of delay to know whether the ship is light or loaded. If loaded, delay is likely to be longer and more serious; but on the other hand, the prospect of ultimate fruition from the adventure, which is at any rate begu n, is thus increased. The present charter I treat as wholly executory, for altho ugh the charterers had definitely named Hull as the loading port, the hiring was not to commence till the Quito was placed at their disposal there, which never took place. The theory of dissolution of a contract by the frustration of its commercial obj ect rests on an implication, which arises from the presumed common intention of the parties. "Where the contract makes provision" (that is, full and complete pr ovision, so intended) "for a given contingency it is not for the Court to import into the contract some other and different provision for the same contingency c alled by a different name": Bailhache J. n(7) This is a matter of

n(1) L. R. 10 C. P. 125. n(2) (1881) 6 App. Cas. 38, 62. n(3) L. R. 7 Q. B. 404, 413.

n(4) [1916] 2 A. C. 397, 428. n(5) [1897] A. C. 609. n(6) [1914] 3 K. B. 45. n(7) [1916] 1 K. B. 438. construction according to the usual rule. A contingency may be provided for, but not in such terms as to show that the provision is meant to be all the provisio n for it. A contingency may be provided for, but in such a way as shows that it is provided for only for the purpose of dealing with one of its effects and not with all. In the present case three clauses are relied on as express provisions for the event and consequences of an Admiralty requisition delaying or preventin g the placing of the Quito at the charterers' disposal, Nos. 14, 26, and 31. Whe n the Admiralty requisitioned her she became subject to a restraint of princes, one of the causes mentioned in clause 14, which says "throughout this charter lo sses or damages, whether in respect of goods carried or to be carried or in othe r respects arising or occasioned by the following causes, shall be absolutely ex cepted." In the first place, I think this claim is not for "loss or damage" with in that clause, but in the second the meaning of such an ordinary clause of exce ption is well settled. It excuses breaches of the contract caused by matters whi ch fall within its terms; it suspends the liability to pay hire without finally determining it; but relief from the liability to pay damages or hire and complet e discharge from further obligation to perform the contract are different things . "Restraint of princes throughout this charterparty always excepted" and "the c ontract to be no longer binding if a restraint of princes frustrates its commerc ial object" are neither in my opinion mutually inconsistent clauses nor such tha t the expression of the first intimates an intention that restraint of princes i s not to be dealt with further and otherwise, so as to preclude any implication on the subject. The same may be said of clause 31. It means that, if the Admiralty should requis ition the ship, the charter may be forthwith cancelled by the charterers, withou t waiting to see or having to show that its object is thereby frustrated. This i s a separate provision from that which the appellants seek to imply, and is not inconsistent with it. As to clause 26, the cancelling clause, I am unable to acc ept the construction of it, which makes it mean that after April 30 and until th e ship is delivered for the chartered service, however long the interval may be, t he charterers can at any moment spring on the shipowners a cancellation of the c ontract, and can hold them bound so long as they choose to hold their own tongue s. The shipowners' option given by the second part of the clause was expressly d evised to prevent a much less arbitrary use of the right to cancel, and I cannot believe that the clause, if understood as the respondents read it, could ever h ave become the subject of a consensus ad idem. After all, it is a stipulation in the charterers' favour, and cannot be given so extreme a meaning, unless that m eaning is clearly expressed. The parties never meant that the shipowners should remain indefinitely at the charterers' mercy. The principle of frustration is rendered difficult by some uncertainty as to the tests to be used. In what terms ought the circumstances to be defined, which le ad to the dissolution of the contract, and who is to apply them, the judge or th e jury? There has been an unfortunate diversity in the terms used in different c ases. The expression "frustrate the commercial object of the contract" is taken from Jackson v. Union Marine Insurance Co. n(1) In Poussard v. Spiers n(2) Black burn J., transferring the rule in Jackson's Case n(1) from a steamship to a prim e donna, says that if the delay "is so great as to go to the root of the matter, it frees the charterer from his obligation to furnish a cargo." In Bensaude's C

ase n(3) Lord Esher M.R. speaks of delay "so long as to render the adventure whi ch the charterparty was intended to cover absolutely nugatory." In the same case in your Lordships' House each noble and learned Lord in turn employed a new and different expression for the same well-recognized thing. Lord Halsbury speaks o f an "impossibility of prosecuting the voyage within the time within which it wa s necessary to prosecute it"; Lord Watson of "such delay in the prosecution of h er voyage as entitled the charterer to determine the adventure" (which, surely w rongly, treats the case like

n(1) L. R. 10 C. P. 125. n(2) (1876) 1 Q. B. D. 410, 414. n(3) [1897] 1 Q. B. 29, 31; [1897] A. C. 609, 611, 612, 614. Mersey Steel and Iron Co. v. Naylor, Benzon & Co. n(1) as a case of the determin ation of a contract depending on the choice of one party instead of resulting au tomatically from the event); while Lord Herschell says "so that the adventure ca nnot be completed within the time contemplated," which would make mere unexpecte d delay sufficient. In Bush v. Whitehaven Trustees n(2) Lord Lindley, then a mem ber of the Court of Appeal, relies on "delay so great as not to be fairly within the terms of the contract at all; that is to say, that the delay was so great t hat the contract cannot apply to the state of things to which the contractor and the defendants had imagined that it did." It would not be difficult to find oth er passages in more recent cases where the events which cause dissolution of the contract are diversely described. "An interruption may be so long as to destroy the identity of the work or service, when resumed, with the work or service whe n interrupted." Per Lord Dunedin. n(3) "An interruption so great and long as to make it unreasonable to require the parties to go on" is Lord Atkinson's phrase. n(4) The fact that delay occurs, the duration of which at the outset is uncerta in, obviously is not enough to dissolve the contract: Braemount S.S. Co. v. Weir & Co. n(5) For the time being the performance of the contract must have become altogether impossible, for the consequence is dissolution of the contract altoge ther, and in this I agree with what Bailhache J. says in the Anglo-Northern Trad ing Co.'s Case. n(6) Delay even of considerable length and of wholly uncertain duration is an inciden t of maritime adventure, which is clearly within the contemplation of the partie s, such as delay caused by ice or neaping, so much so as to be often the subject of express provision. Delays such as these may very seriously affect the commer cial object of the adventure, for the ship's expenses and over-head charges are running on and, even with the benefit of Protecting and Indemnity Club policies, the margin of profit is quickly run off. None the less this

n(1) (1884) 9 App. Cas. 434. n(2) (1888) Hudson on Building Contracts (4th ed.), Vol. II., 122, 133. n(3) [1918] A. C. 128. n(4) Ibid. 131. n(5) [1910] 15 Com. Cas. 101. n(6) [1917] 2 K. B. 78.

is not frustration; the delay is ordinary in character, and in most cases the ch arterer is getting the use of the chartered ship, even though it is unprofitable to him. I think also that the doctrine is one which ought not to be extended, t hough to cases that really fall within the decided rule it must be applied as a matter of course even under novel circumstances. The matter is the more importan t because of the part which a jury may be called on to play in deciding the ques tion. Ultimately the frustration of an adventure depends on the facts of each ca se, but it is no easy matter so to direct a jury as that they will neither ask t hemselves what the actual parties thought of at the date of the contract nor dis pose of the case by saying that it would be unreasonable to find a verdict for t he claimant nor be governed only by their action of what is fair between man and man nor be left in impenetrable doubt as to what the legal direction means. Lor d Watson says in Dahl v. Nelson; Donkin & Co. n(1) that "there may be many possi bilities within the contemplation of the contract of charterparty which were not actually present to the minds of the parties at the time of making it, and, whe n one or other of these possibilities becomes a fact, the meaning of the contrac t must be taken to be, not what the parties did intend (for they had neither tho ught nor intention regarding it), but that which the parties, as fair and reason able men, would presumably have agreed upon if, having such possibility in view, they had made express provision as to their several rights and liabilities in t he event of its occurrence." This is an authoritative explanation of the legal t heory on which the doctrine rests, but to use it as a direction to a jury is to tell them to do as they like. The phrase "goes to the root of the contract," lik e most metaphors, is not nearly so clear as it seems. In Jackson's Case n(2) the jury was asked whether the time necessary for getting the ship off and repairin g her so as to be a cargo-carrying ship was so long as to put an end in a commer cial sense to the commercial speculation entered upon by the shipowner and the

n(1) 6 App. Cas. 38, 59. n(2) L. R. 10 C. P. 125. charterers, and in Bush v. Whitehaven Trustees n(1) whether the conditions of th e contract were so completely changed in consequence of the defendant's inabilit y to hand over the site of the work, as required, as to make the special provisi ons of the contract inapplicable. The danger in each case so put is that the jur y will think that the contract is as wax in their hands. A. T. Lawrence J. puts the matter very usefully thus in the Scottish Navigation Co.'s Case. n(2) : "No such condition should be implied when it is possible to hold that reasonable men could have contemplated the circumstances as they exist and yet have entered in to the bargain expressed in the document." For my own part I incline to prefer t he expression already quoted from my noble and learned friend Lord Dunedin, and substantially adopted by Scrutton L.J. in the Court of Appeal. My Lords, applying these considerations I am of opinion that the requisitioning of the Quito destroyed the identity of the chartered service and made the charte r as a matter of business a totally different thing. It hung up the performance for a time, which was wholly indefinite and probably long. The return of the shi p depended on considerations beyond the ken or control of either party. Both tho ught its result was to terminate their contractual relation by the middle of Jun e and, as they must have known much more about it than I do, there is no reason why I should not think so too. I should allow the appeal. JUDGMENTBY-5: LORD WRENBURY JUDGMENT-5: LORD WRENBURY: My Lords, I am unable to find in the charterparty the contractual year from April to April which Scrutton L.J. found and which forms the basis of

his judgment. The contract I think was as follows: The owners agreed to let and the charterers to hire the steamer for twelve months, to commence at a date not fixed so far as art. 1 is concerned, except that it was to be the date when she was placed at the disposal of the charterers at a coal port as ordered by them. The effect of art. 26 is that that date

n(1) Hudson on Building Contracts, Vol. II., p. 122. n(2) [1917] 1 K. B. 222, 249. may be any date not before April 1 subject to the right of the charterers to ref use her and to cancel the charter if she is tendered after April 30. During a re asonable time the owners owed to the charterers the contractual duty of tenderin g the vessel. If they were for reasons beyond their control unable to tender her within a reasonable time their contractual duty in this respect would cease. Du ring May and June no doubt they owed this duty. It does not follow that they owe d it in September. The question to be answered I think is this. Did this contrac tual duty still rest upon the owners in September? As regards art. 31, it seems to me that the words "during this charter" mean "du ring the subsistence of this contract" and not "during the time the vessel is em ployed under this contract"; but nothing turns upon the article, for even if the facts would have justified the charterers in cancelling the charter by reason o f the commandeering of the vessel they did not exercise their option in this res pect. The principle of Jackson v. Union Marine Insurance Co. n(1) as reviewed in Horlo ck v. Beal n(2) and Tamplin Steamship Co. v. Anglo-Mexican Petroleum Products Co . n(3) I understand to be that there may under the circumstances of any particul ar case be added to a contract by implication - so long as the addition is not i nconsistent with any expressed term of the contract - a term that a delay for wh ich neither party is responsible so great and so long as to make it unreasonable to require the contracting parties to go on with an adventure shall entitle eit her of them, at least while the contract is executory, to consider it as at an e nd. If in the present case such a delay had occurred the owners were entitled to consider the whole contract including art. 26 as at an end, and in such case th eir contractual duty under art. 26 to tender the vessel no longer existed. My Lords, I doubt whether down to June 9, when the correspondence between the pa rties fell into silence, the owners' duty in this respect had lapsed. The interv iew of

n(1) L. R. 10 C. P. 125. n(2) [1916] 1 A. C. 486. n(3) [1916] 2 A. C. 397. May 14 and the letters of May 17 no doubt support an inference that the chartere rs' view was that a delay of more than three months from that date would so affe ct the adventure that they would not be bound. However this may be, the facts ar e that the parties were not able to obtain the release of the vessel at that tim e and the matter drops into silence until September 3. Was the owner still bound to tender the vessel at that date? Or if the contract had not given the charter ers an option to cancel could the owners have compelled them to take her at that date? I think not.

A term cannot be implied which is inconsistent with a express term of the contra ct; but it is no objection that it enlarges or adds to the express terms; every implied term does that. The express terms of this contract relevant in this resp ect are only arts. 26 and 31. They are terms which entitle the charterers to can cel in certain events. There is no inconsistency in an implied term which entitl es either party to treat the contract as at an end if the date of commencement o f the contractual year is by reasons beyond their control postponed beyond a rea sonable time. Upon the question of fact I agree that before September that reaso nable time had expired and there no longer rested upon the owners the contractua l duty to tender her. This I think is what Lord Justice Scrutton intended by his judgment to convey - and if so understood I agree with him. The appeal I think succeeds. DISPOSITION: Order of the Court of Appeal reversed and judgment of Rowlatt J. restored. The r espondents to pay the costs in the courts below and, also the costs of the appea l to this House. Lords' Journals, December 12, 1918. SOLICITORS: Solicitors for the appellants: Holman, Fenwick & Willan. Solicitors for the respondents: Wm. C. Dawson & Loncaster. (c)2001 The Incorporated Council of Law Reporting for England & Wales