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ICLR: King's/Queen's Bench Division/1948/Volume 1/MORGAN v. MANSER. - [1948] 1 K.B. 184

[1948] 1 K.B. 184

[KING'S BENCH DIVISION]

MORGAN v. MANSER.
1947 Oct. 20, 21, 22, 23, 24.

Streatfeild J.

Contract - Manager to music hall artiste for term of ten years - Artiste not to offer his services to any other
agent during term - Artiste called up for service in army - Absent for six years - Frustration of contract -
Termination of contract by mutual consent.

The principle as to frustration of a contract may be stated thus: If there is an event or change of circumstance
which is so fundamental as to be regarded by the law as striking at the root of the contract as a whole and as
going beyond what was contemplated by the parties and such that to hold the parties to the contract would
be to bind them to terms which they would not have made had they contemplated that event or those
circumstances, then the contract is frustrated by that event immediately and irrespective of the volition or the
intention of the parties or their knowledge as to that particular event; and this even although they have
continued for a time to treat the contract as still subsisting. In those circumstances the court would grant
relief and pronounce that the contract had been frustrated either by implying a term to that effect or
otherwise.

The defendant, a music hall artiste, entered in February, 1938, into an agreement with the plaintiff by which
he appointed the plaintiff his manager for a term of ten years, and the plaintiff agreed to use his best
endeavours to obtain engagements for the defendant at music halls, theatres, and in connexion with
broadcasting, gramophone records and cinematograph films, and the defendant agreed to pay the plaintiff a
certain percentage of his earnings. The defendant also agreed that he would not, during the term of the
agreement, negotiate, book or offer his services to any other agent, manager, theatre proprietor or
broadcasting corporation, or perform or give his services for salary or reward or for charity, without the
consent of the plaintiff. The defendant was called up in June, 1940, for service in the army, and he was not
[1948] 1 K.B. 184 Page 185

demobilized until February, 1946. The plaintiff alleged that the defendant had, in October, 1945, in breach of
his agreement, entered into a contract with agents other than the plaintiff to appear in a theatrical
performance, and that since February, 1946, the defendant had, without the plaintiff's consent and without
making to the plaintiff any payments in respect thereof engaged his services to agents or managers other
than the plaintiff and to theatre proprietors; and the plaintiff claimed damages for the defendant's breach of
his agreement. The defendant contended (inter alia) that by reason of an implied term the agreement was
rescinded or dissolved by reason of his call-up to the army; alternatively, that the agreement was frustrated
and rendered impossible of performance.

Held, that there was such a change of circumstances and for such a duration that the original contract,
looked at as a whole, was invaded by the call up of the defendant so fundamentally that it must be held to
have been frustrated by that event.
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ACTION tried before Streatfeild J.

On February 8, 1938, the plaintiff, a music hall agent and music publisher, entered into an
agreement with the defendant, a music hall artiste whose professional name was Charlie Chester,
by which the defendant appointed the plaintiff as his manager for a term of ten years from that date;
and the plaintiff agreed to use his best endeavours on behalf of the defendant to obtain
engagements for him at music halls, theatres, and in connexion with broadcasting, gramophone
records and cinematograph films in the United Kingdom and elsewhere throughout the world, and
to obtain maximum salaries and payments for the defendant's services. In consideration therefor
the defendant agreed to pay the plaintiff 30 per cent. of all his earnings on engagements booked by
the plaintiff and 35 per cent. of his earnings on engagements booked by the plaintiff with the aid of
another agent. It was also an express term of the agreement that the defendant should not, during
the term thereof, negotiate, book or offer himself or his services, to any other agent, manager, or
theatre proprietor or broadcasting corporation, or perform or give his services for salary or reward,
or for charity, without the consent of the plaintiff.

The plaintiff in this action claimed damages. He alleged that he had used his best endeavours in
the performance of his obligations and was at all times ready and willing to perform the same, but
that the defendant in breach of his agreement in October, 1945, without the plaintiff's consent
entered into a contract with certain other theatrical agents or managers to
[1948] 1 K.B. 184 Page 186

appear in a theatrical production; and that since February, 1946, the defendant without the plaintiff's
consent, and without making any payments to the plaintiff in respect thereof, had wrongfully
engaged his services to other agents or managers and to theatre proprietors, and to the British
Broadcasting Corporation. The plaintiff also alleged that the defendant had, by letters from his
solicitors, refused to perform his part of the agreement.

The defendant by his defence averred that in June, 1940, he was called up for service in His
Majesty's Army for the duration of the then existing war, and that by reason of an implied term the
agreement was thereupon rescinded and dissolved; alternatively, that the further operation thereof,
and the object and purpose of the parties thereto, was frustrated and rendered impossible of
performance, and the said personal relationship was destroyed. He further alleged that in August,
1945, the contract was rescinded by mutual consent: but on this point the case does not call for
report.

Roy M. Wilson and John Wilcox for the plaintiff.

Rodger Winn and Lord Vaughan for the defendant.

The arguments sufficiently appear from the judgment.

STREATFEILD J. It is clear that the fundamental object of the contract was not only that the manager should
obtain, but that the artiste should be in the position to perform, engagements which the manager obtained for
him - that is to say, in connexion with music halls, theatres, broadcasting, gramophone records, and
cinematograph films.

Neither party considered in February, 1938, that during the currency of that agreement there might be an
event which would prevent the fundamental object thereof from being carried out, and the question which I
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have to decide here is whether the call-up of Mr. Chester and his entry into military service in June, 1940, as
opposed to the event of the war itself, operated as a frustration of it. When the war came, even before Mr.
Chester was called up there were altered conditions. There was, undoubtedly, an extra outlet for the activities
of Mr. Chester through an organization called E.N.S.A. At the same time, there were obviously restrictions in
that outlet. It was really a different form of activity from that which he had been doing before the war, and
conducted on different lines from the engagements arising out of the contract itself,
[1948] 1 K.B. 184 Page 187

whereunder Mr. Morgan had been entitled to a percentage of the fees paid to the artiste.

Then there came this obstacle to the proper fulfilment of this contract, namely, the call-up of Mr. Chester in
June, 1940, for service in the army. There he remained until he was demobilized in February, 1946. He might
have remained in an operational unit during the whole of the war, in which case it would have been clear that
there would have been such an interruption in the continuity of this contract as would clearly have amounted
to a frustration of the objects of the contract. Instead of that, after eighteen months of military training, he was
transferred to the entertainments pool where he continued for the rest of his army career in carrying out a
very important and very useful work, but not for his own benefit. He did, of course, gain this much from it, that
he kept his hand in in his ordinary civilian employment, and, no doubt, was able to keep his name I before
the public, and the army. During that period, too, Mr. Morgan undoubtedly did do something to try to keep the
defendant's name before the public and before potential employers after the war.

What is frustration of a contract? Various theories have been put forward, and have been examined in the
House of Lords, but I do not think that it is necessary that any decision should be come to as to the precise
basis on which frustration is founded. I think it is enough that one should look at a few of the authorities to
which my attention has been drawn. From those I think it is clear what are the principles to be applied to the
facts of this case. One naturally turns to the well-known passage of Lord Loreburn's speech in the F. A.
Tamplin Steamship Co., Ld. v. Anglo-Mexican Petroleum Products Company, Ld. (1), where he said: "In order
to decide this question it is necessary to ascertain the principle of law which underlies the authorities. I
believe it to be as follows: When a lawful contract has been made and there is no default, a court of law has
no power to discharge either party from the performance of it unless either the rights of some one else or
some Act of Parliament give the necessary jurisdiction. But a court can and ought to examine the contract
and the circumstances in which it was made, not of course to vary, but only to explain it, in order to see
whether or not from the nature of it the parties must have made their bargain on the footing that a particular
thing or

(1)     [1916] 2 A. C. 397, 403.

[1948] 1 K.B. 184 Page 188

state of things would continue to exist. And if they must have done so, then a term to that effect will be
implied, though it be not expressed in the contract. In applying this rule it is manifest that such a term can
rarely be implied except where the discontinuance is such as to upset altogether the purpose of the contract.
Some delay or some change is very common in all human affairs, and it cannot be supposed that any
bargain has been made on the tacit condition that such a thing will not happen in any degree." .... When our
courts have held innocent contracting parties absolved from further performance of their promises, it has
been upon the ground that there was an implied term in the contract which entitled them to be absolved.
Sometimes it is put that performance has become impossible and that the party concerned did not promise to
perform an impossibility. Sometimes it is put that the parties contemplated a certain state of things which fell
out otherwise. In most of the cases it is said that there was an implied condition in the contract which
operated to release the parties from performing it, and in all of them I think that was at bottom the principle
upon which the court proceeded. It is, in my opinion, the true principle, for no court has an absolving power,
but it can infer from the nature of the contract and the surrounding circumstances that a condition which is
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not expressed was a foundation on which the parties contracted." There, Lord Loreburn is stating what we
have been calling the "implied term" theory.

The other way in which it can be put, not using the words "implied term," is to be found in the speech of Lord
Simon in Cricklewood Property & Investment Trust, Ld. v. Leighton's Investment Trust, Ld. (1): "Frustration,"
he says "may be defined as the premature determination of an agreement between parties, lawfully entered
into and in course of operation at the time of its premature determination, owing to the occurrence of an
intervening event or change of circumstances so fundamental as to be regarded by the law both as striking at
the root of the agreement, and as entirely beyond what was contemplated by the parties when they entered
into the agreement. If, therefore, the intervening circumstance is one which the law would not regard as so
fundamental as to destroy the basis of the agreement, there is no frustration. Equally, if the terms of the
agreement show

(1)     [1945] A. C. 221, 228.

[1948] 1 K.B. 184 Page 189

that the parties contemplated the possibility of such an intervening circumstance arising, frustration does not
occur. Neither, of course, does it arise where one of the parties has deliberately brought about the
supervening event of his own choice." (See the cases collected in Joseph Constantine Steamship Line, Ld.
v. Imperial Smelting Corporation, Ld. (1).) "But where it does arise, frustration operates to bring the
agreement to an end as regards both parties forthwith and quite apart from their volition." On p. 232 the Lord
Chancellor says: "Frustration, where it exists, does not work suspension but brings the whole arrangement to
an inevitable end forthwith." Dealing with the case before him, with regard to a lease, he said he could not
regard the interruption which had arisen as such as to destroy the identity of the arrangement or make it
unreasonable to carry out the lease according to its terms as soon as the interruption in building was over. It
is noticeable that, in that case, Lord Simon, although he had himself spoken of the "implied term" theory in
the Joseph Constantine Steamship Line, Ld. v. Imperial Smelting Corporation, Ld. (1), was, in this passage,
actually not using the words "implied term." But, it seems that, having regard to other pronouncements that
that distinction may not really have been of particular moment.

In Hirji Mulji v. Cheong Yue Steamship Co., Ld. (2), Lord Sumner says: "An event occurs, not contemplated
by the parties and therefore not expressly dealt with in their contract, which, when it happens, frustrates their
object. Evidently it is their common object that has to be frustrated, not merely the individual advantage
which one party or the other might have gained from the contract. If so, what the law provides must be a
common relief from this common disappointment and an immediate termination of the obligations as regards
future performance. This is necessary, because otherwise the parties would be bound to a contract, which is
one that they did not really make. If it were not so, a doctrine designed to avert unintended burdens would
operate to enable one party to profit by the event and to hold the other, if he so chose, to a new obligation."
On p. 509, Lord Sumner continues: "Evidently, therefore, whatever the consequences of the frustration may
be upon the conduct of the parties, its legal effect does not depend on their intention or their opinions, or
even knowledge, as to the event,

(1)     [1942] A. C. 154, 160.

(2)     [1926] A. C. 497, 507.

[1948] 1 K.B. 184 Page 190

which has brought this about, but on its occurrence in such circumstances as show it to be inconsistent with
further prosecution of the adventure. Sometimes the event is such as to speak for itself, like the outbreak of
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war on August 4, 1914, in Horlock v. Beal (1), see per Lord Wrenbury. Sometimes the frustration is evident,
when the gravity and the circumstances of the breakdown can be known, as in Bensaude's case(2);
sometimes, as in the case of requisition, when it can be known that in all reasonable probability the delay will
be prolonged and a fortiori when it has continued so long as to defeat the adventure. Frustration is then
complete. It operates automatically: Larrinaga & Co.'s case(3). What the parties say and do is only evidence,
and not necessarily weighty evidence, of the view to be taken of the event by informed and experienced
minds."

Lastly of the important matters which have been referred to me in this connexion, there is the case of Denny,
Mott & Dickson, Ld. v. James B. Fraser & Co. (4). Lord Wright says: "It is now I think well settled that where
there is frustration a dissolution of a contract occurs automatically. It does not depend, as does rescission of
a contract, on the ground of repudiation or breach, on the choice or election of either party. It depends on
what actually has happened on its effect on the possibility of performing the contract. Where, as generally
happens, and actually happened in the present case, one party claims that there has been frustration and the
other party contests it, the court decides the issue and decides it ex post facto on the actual circumstances of
the case." Then, Lord Wright discusses at some length the basis of the "implied term" rule, and he
enunciates what he calls the somewhat heretical theory to which my attention has been drawn. Lord
Porter(5) quotes the passage from Lord Loreburn in the Tamplin Steamship Company case(6) to which I
have already referred, and he continues: "Whether this result follows from a true construction of the contract
or whether it is necessary to imply a term or whether again it is more accurate to say that the result follows
because the basis of the contract is overthrown, it is not necessary to decide. The principle is well
established but it is the contract as a whole which has to be considered, not a part only." He

(1)     [1916] 1 A. C. 486, 528.

(2)     [1897] A. C. 609.

(3)     (1922) 27 Com. Cas. 160.

(4)     [1944] A. C. 265, 274.

(5)     Ibid. 281.

(6)     [1916] 2 A. C. 397, 403, 404.

[1948] 1 K.B. 184 Page 191

then goes on to approve of the passage in the 11th edition of Pollock on Contracts at p. 255, with one slight
amendment which has now been made in the 12th edition at p. 246: "Further, it is to be observed that the
disturbing cause must go to the extent of substantially preventing the performance of the whole contract," the
amendment being that it should be "the contract as a whole."

It seems to me from those authorities that whether relief is given by way of implying a term or otherwise, the
principle may be stated in this way. If there is an event or change of circumstances which is so fundamental
as to be regarded by the law as striking at the root of the contract as a whole, and as going beyond what was
contemplated by the parties and such that to hold the parties to the contract would be to bind them to terms
which they would not have made had they contemplated that event or those circumstances, then the contract
is frustrated by that event immediately and irrespective of the volition or the intention of the parties, or their
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knowledge as to that particular event, and this even although they have continued for a time to treat the
contract as still subsisting. In those circumstances the court would grant relief and pronounce that the
contract has been frustrated either by implying a term to that effect or otherwise. Their own belief and their
own knowledge and their own intention is evidence, and evidence only, upon which the court can form its
own view whether the changed circumstances were so fundamental as to strike at the root of the contract
and not to have been contemplated by the parties.

It has been urged upon me that, in this case, the parties after the call-up of the defendant, continued to treat
the contract, as nearly as they could, as though it was still subsisting. It is agreed that the scope of the
contract was necessarily much restricted, but it has been urged that the parties so far as possible continued
under it, realizing that the contract was not wholly impossible to carryout; that Mr. Chester continued to treat
Mr. Morgan as his manager and Mr. Morgan continued to carry out that part of the contract which remained
with a view to resuming full activity when the artiste should be released from the army. I am not sure that,
while the parties were carrying on in that way and the defendant continued to treat the plaintiff as his
manager, that either was really acting in pursuance of an existing contract between them. It may well have
been that the defendant regarded it as a
[1948] 1 K.B. 184 Page 192

matter to his advantage that he should have someone behind him to whom he could refer as his "Manager."
It may well be that the plaintiff thought that here was his protege who had done well in the past, and after the
war was likely to do well again, and that it was desirable in everyone's interest that he should have his name
kept before the public with a view to resuming either that or entering into some other contract afterwards. I
am not at all sure that they really regarded it as being the continuance of the original contract. But looking at
the contract as a whole, I have to ask myself whether, in spite of their conduct and their intention afterwards,
this contract or what remained of it was so fundamentally changed after the defendant was called up for
military service, that, having regard to the prospective delay, the interruption was such that, inevitably, the
contract could not be continued. One has to look back to those days in 1940 when the defendant was called
up, when the fate of this country, as we all remember, hung on a thread, when anyone who was at that stage
called up was likely to be in military service for a very considerable time, and when it was obvious that either
the thread would snap altogether or the war would be of long duration. Mr. Chester was a young man, and,
given physical fitness, was likely to be in the service for a considerable time.

After he was transferred to the Entertainments Pool it seems to me that what he was able to do was not for
his own benefit, except in so far as he kept his name before the public, a limited public. What he was doing
then was something quite different from what was contemplated by the original contract. In my judgment the
parties were keeping open the position so that the work of manager and artiste would be more easily
resumed after his period of military service. The contract was essentially personal to both parties. It could
only be carried out by the defendant appearing personally in the engagements which the plaintiff would
obtain for him. It involved the parties in a continuous relation involving efforts on both sides, and neither of
them was able to carry out these efforts in the manner which was contemplated by them. In my view, to
affirm their contractual adventure now, although it could not have been acted on, is to substitute a new
contract. For that phrase I refer to the words of Rowlatt J. in Distington Hematite Iron Co. v. Possehl & Co.
(1): "This contract does not provide for performance of a future act

(1)     [1916] 1 K. B. 811, 814.

[1948] 1 K.B. 184 Page 193

or a series of disjointed acts, some immediate and others more remote. This contract involves the parties in a
continuous relation involving efforts on both sides, of which the essence is continuity. To affirm such a
contract as standing generally although at the present time and for an indefinite period it cannot be acted on
is not to maintain the original contract, but to substitute a different contract for it. To say that the contractual
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obligations shall exist now and henceforth and to say that they cannot be performed now and that no one
knows when they will become performable again is, having regard to the nature of the obligations in this
case, a simple contradiction. The result is that, the war having interfered with the performance of this
contract, the contract is dissolved."

A similar instance of frustration is to be found in Marshall v. Glanvill (1). There one of the parties to the
contract was called up for military service, after which it became illegal for him to carry out his contract of
service with his employers. It cannot be said in the present case that such a course would involve any
illegality. But it would be impossible to contemplate that a soldier on military service could carry out the
engagements which were provided for in the contract. Rowlatt J. in Marshall v. Glanvill (1) said that the
"effect of the Military Service Act, 1916, was to take the plaintiff out of the employment of the defendants. He
could no longer execute their orders or go about their business and they could no longer employ him. For the
present and for an indefinite period in the future he is out of their employment."

Another case to which my attention was drawn was that of Unger v. Preston Corporation (2), where it was
held that the internment of one of the parties to a contract for a period other than a very short time operated
as a frustration of the contract.

In Bank Line, Ld. v. Arthur Capel & Co. (3), Lord Sumner deals with the matter in this way, after instancing
certain cases he said: "All these are cases of delay arising out of the exigencies of the present war; and the
length of the delay was especially dwelt on in the particular circumstances of Tamplin's case(4). Bailhache J.
says(5), that the main thing to be considered is the probable length of the total

(1)     [1917] 2 K. B. 87, 90.

(2)     [1942] 1 All E. R. 200.

(3)     [1919] A. C. 435, 454.

(4)     [1916] 2 A. C. 397.

(5)     [1917] 2 K. B. 84.

[1948] 1 K.B. 184 Page 194

deprivation of the use of the chartered ship compared with the unexpired duration of the charter-party, 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
parties, when they came to know of the cause and the probabilities of the delay and had to decide what to do
On this the judgments in the above cases substantially agree." Then, he continues: "What happens
afterwards may assist in showing what the probabilities really were, if they had been reasonably forecasted,
but when the causes of frustration have operated so long or under such circumstances as to raise a
presumption of inordinate delay, the time has arrived at which the fate of the contract falls to be decided.
That fate is dissolution or continuance and, if the charter ought to be held to be dissolved, it cannot be
revived without a new contract."
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Lastly, an instance was given to me in a quotation from Lord Dunedin's speech in Metropolitan Water Board
v. Dick, Kerr & Co. (1): "The order pronounced under the Defence of the Realm Act not only debarred the
respondents from proceeding with the contract, but also compulsorily dispersed and sold the plant. It is
admitted that an interruption may be so, long as to destroy the identity of the work or service, when resumed,
with the work or service when interrupted. But quite apart from mere delay it seems to me that the action as
to the plant prevents this contract ever being the same as it was. Express the effect by a clause. If the Water
Board had, when the contract was being settled, proposed a clause which allowed them at any time during
the contract to take and sell off the whole plant, to interrupt the work for a period no longer than that for which
the work has actually been interrupted, and then bound the contractor to furnish himself with new plant and
recommence the work, does anyone suppose that Dick, Kerr & Co., or any other contractor would have
accepted such a clause? And the reason why they would not have accepted it would have been that the
contract when resumed would be a contract under different conditions from those which existed when the
contract was begun." That illustration might well be applied to the facts of this case. There, there was a
temporary

(1)     [1918] A. C. 119, 128.

[1948] 1 K.B. 184 Page 195

obstruction or removal of the material. Here, there was a requisition of the marl as opposed to the requisition
of a ship, but it seems that the requisition of the man was made under such circumstances that the terms of
the original contract could not be carried out. So, in spite of the very able argument which has been put
forward on behalf of the plaintiff by learned counsel, I have come to the conclusion that there was here such
a change of circumstances and for such a duration that the original contract looked at as a whole was so
fundamentally invaded by the calling up of Mr. Chester that it must be held to have been frustrated by reason
of that event.

[His Lordship then dealt with the plea that the agreement had been rescinded by mutual consent in August,
1945, and held on the evidence that it was proved.]

It followed, on both aspects of the case, that there must be judgment for the defendant with costs.

Judgment for defendant.

Solicitors for plaintiff: Clare & Clare.

Solicitors for defendant: Bartlett & Gluckstein.

R. F. S.