Jackson v Union Marine Insurance Co [1874]

Court: Exchequer Chamber

Facts: A shipowner (C) entered into a charterparty with a charterer to deliver nails to San Francisco. However, the ship ran aground, leading to significant delays. The charterer withdrew from the charterparty due to the delay. The shipowner sought compensation from their insurer (D) for the loss of freight, claiming it was due to a ‘peril of the sea.’ The insurer contested, arguing there would be no insurance claim if the charterer had breached the contract.

Issue: Was the charterer’s withdrawal justified due to frustration of the contract, and could the shipowner claim for the loss of freight from the insurer?

Held: The Exchequer Chamber ruled in favor of the shipowner. The contract was frustrated due to the delay caused by the ship running aground. Since the ship was unavailable to carry out the charter in a timely manner, the charterer’s withdrawal was justified. The insurer was liable to compensate the shipowner for the loss of freight.

Key Judicial Statements: Bramwell B explained that there was no breach of contract by the charterer because the delay rendered the shipment impossible. An implied condition in the contract required the ship to be available in time to complete the shipment. The delay caused by the grounding meant the charterparty was frustrated.

💡 Leveluplaw: in situations where delays or other circumstances make fulfilling a contract impossible, the contract can be frustrated, excusing one or both parties from their obligations.