Herne Bay Steam Boat Company v Hutton [1903] 2 KB 683

Court of Appeal

Basic Facts: C (Herne Bay Steam Boat Company) agreed to hire out a vessel to D (Hutton) for two days. The contract specified that the vessel was to be used for viewing a royal naval review at Spithead and for a day’s cruise around the fleet on the first day, and for “similar purposes” on the second day. The naval review was canceled due to the King’s illness, although the fleet remained. D sought to cancel the contract, arguing that the primary purpose was frustrated. C sued for breach of contract.

Issue for the Court: Does the cancellation of one primary purpose of the contract, while another purpose remains possible, result in frustration of the contract?

Held : The court held that the contract was not frustrated despite the cancellation of the naval review. The two purposes of the contract (viewing the review and cruising around the fleet) were distinct. The primary purpose of viewing the review was not the sole foundation of the contract.

• Romer LJ : The contract was not merely a license to use the ship for viewing the naval review but a hiring contract for a specific voyage. The contract’s subject matter was the hire of the ship, not solely for viewing the naval review, so the contract was not frustrated as the fleet remained viewable.

• Stirling LJ: The contract was not frustrated because the fleet, a key part of the contract, was still available for viewing. The naval review was an additional feature that explained the nature of the voyage but was not the foundation of the contract.