J Lauritzen AS v Wijsmuller BV (Super Servant Two) [1990]

Facts: D was contracted with C to move an oil rig, either using D’s ship Super Servant One or D’s ship Super Servant Two.  Before contract performance, Super Servant Two sank, and Super Servant One was already contracted elsewhere.  D claimed frustration of the contract, C sued for breach.

 Issue for the Court: When is frustration self-induced?

 Held:

Dillion LJ

 ·      D could have used SS1 to fulfil the contract

o   But chose not to do so.

§  This is the important point.

·      Has been suggested that if you act in such a way as to reasonably allocate resources in order to fulfil your contracts.

o   Those you don’t fulfil owing to some supervening event can be treated as being frustrated.

§  However, this is contrary to Maritime National Fish where it is irrelevant what reasons are employed to allocate resources.

·      Plus, if an option is open to D.

o   Then the contract does not end automatically

§  Meaning it fails on the basic nature of what frustration is.

Bingham LJ

·      Certain Propositions are not open to question:

o   Doctrine of Frustration attempts to deal with unfairness of Law’s insistence on literal performance of contract.

o   Doctrine is not likely invoked since it kills contracts at that point.

o   Frustration bring contract to an end without more and automatically.

o   Frustration should not be due to act or election of party seeking to rely on it.

o   Frustrating event must take place without fault on the side of party seeking to rely on it.

·      If contract had been for Super Servant Two

o   Then contract would have been frustrated in absence of fault

o   However, the option to have either ship means that D gets to elect which to use.

§  And if you’re entitled to elect, then you can’t use frustration as a defence.