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Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd

[1943] AC 32, [1942] 2 All ER 122, 111 LJKB 433, 86 Sol Jo 232, 167 LT 101, 58 TLR 308

Court: HL

Judgment Date: 15/06/1942

Catchwords & Digest

CONTRACT - IMPOSSIBILITY AND MISTAKE - SUBSEQUENT IMPOSSIBILITY AND FRUSTRATION -

IMPOSSIBILITY OF LEGAL PERFORMANCE — FRUSTRATION OF ADVENTURE - SALE OF GOODS
AND CHATTELS - CHANGE OF CIRCUMSTANCES DUE TO WAR — OUTBREAK OF WAR — PLACE
OF DELIVERY BECOMING ENEMY-OCCUPIED TERRITORY
By a contract in writing dated 12 July 1939, respondents, an English company, agreed to sell and
appellants, a Polish company, agreed to purchase machinery for £4,800 of which one-third was to be paid
with the order. Delivery was to be three to four months from settlement of final details and the goods were to
be packed and delivered cif Gdynia, Poland. The sale was made subject to certain conditions, and clause 7
was as follows: ‘Should dispatch be hindered or delayed by any cause whatsoever beyond our reasonable
control, including war a reasonable extension of time shall be granted.’ Only £1,000 out of the sum of £1,600
to be paid with the order was in fact paid. On 1 September 1939, war broke out between Germany and
Poland and on 3 September Great Britain declared war on Germany. On and after 23 September, Gdynia
was occupied by the Germans: Held (1) clause 7 being limited in its ambit to a delay in respect of which ‘a
reasonable extension of time’ might be granted, did not prevent frustration of the contract by reason of the
war on the ground that it made express provision for that contingency, since this war involved prolonged and
indefinite interruption of prompt contractual performance; (2) there having been a total failure of consideration
and the payment of the £1,000 being, under the terms of the contract, a conditional payment on account of
the purchase price and not an absolute, final, or ‘out and out’ payment, appellants could recover that sum
from respondents.

Where a contract on its true construction stipulates that a particular result shall follow, if frustration should
afterwards occur, that stipulation governs the matter, and the rule that freight paid in advance is not to be
returned if completion of the voyage is frustrated should be regarded as a stipulation introduced into such
contracts by custom. But, in the absence of a term of the contract dealing with the matter, there is no
principle that where a contract has been frustrated by such a supervening event as releases from further
performance ‘the loss lies where it falls’ in the sense that sums paid or rights accrued before that event are
not to be surrendered. The claim of a party who has paid money under a contract, to recover it on the ground
that the consideration for which he paid it has wholly failed is not based on any provision in the contract, but
arises because in the circumstances the law gives a remedy in quasi-contract to the party who has not got
what he bargained for. Although, in the formation of a contract, a promise to do a thing may be the
consideration, in dealing with the law of failure of consideration and the right to recover money on that
ground, it is, generally speaking, not the promise which is referred to as the consideration, but its
performance.

SALE OF GOODS - MERCANTILE CONTRACTS - RESTRICTIONS ON IMPORT AND EXPORT -

PREVENTION AND HINDRANCE OF IMPORT AND EXPORT - CLAUSE PROVIDING FOR EXTENSION
OF TIME — WHETHER APPLICABLE TO OUTBREAK OF WAR
By a contract in writing dated July 12, 1939, respondents, an English company, agreed to sell and
appellants, a Polish company, agreed to purchase machinery for £4,800 of which one-third was to be paid
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with the order. Delivery was to be three to four months from settlement of final details and the goods were to
be packed and delivered cif Gdynia, Poland. The sale was made subject to certain conditions and clause 7
was as follows: ‘Should dispatch be hindered or delayed ... by any cause whatsoever beyond our reasonable
control, including ... war ... a reasonable extension of time shall be granted.’ Only £1,000 out of the sum of
£1,600 to be paid with the order was in fact paid. On September 1, 1939, war broke out between Germany
and Poland and on September 3 Great Britain declared war on Germany. On and after September 23 Gdynia
was occupied by the Germans: Held (1) clause 7 being limited in its ambit to a delay in respect of which ‘a
reasonable extension of time’ might be granted, did not prevent frustration of the contract by reason of the
war on the ground that it made express provision for that contingency, since this war involved prolonged and
indefinite interruption of prompt contractual performance; (2) there having been a total failure of consideration
and the payment of the £1,000 being, under the terms of the contract, a conditional payment on account of
the purchase price and not an absolute, final, or ‘out and out’ payment, appellants could recover that sum
from respondents.

Case History
Annotations Case Name Citations Court Date
[1943] AC 32, [1942] 2
Fibrosa Spolka
All ER 122, 111 LJKB
Akcyjna v Fairbairn CaseSearch
— 433, 86 Sol Jo 232, HL 15/06/1942
Lawson Combe Entry
167 LT 101, 58 TLR
Barbour Ltd
308
Fibrosa Spolka
Akcyjna v Fairbairn CaseSearch
Reversing [1942] 1 KB 12 CA 15/05/1941
Lawson Combe Entry
Barbour Ltd

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 Page 3

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 Page 4

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Holt KB 36, 87 ER 918 4 Entry

Document information

Court
House of Lords
Judgment date
15/06/1942