Introduction
The doctrine of frustration in contract law releases both parties from duties when an unexpected event makes performance impossible, unlawful, or fundamentally different from what was agreed. This rule applies only in strict circumstances, requiring the event to be outside either party’s control and not covered by the contract. J Lauritzen AS v Wijsmuller BV (The Super Servant II) [1990] 1 Lloyd’s Rep 1 shows the limits of frustration, particularly when the event results from a party’s own actions or the contract assigns the risk. This case makes clear that frustration cannot be used to avoid obligations if a party caused the issue or if the contract already accounted for the risk.
The Facts of The Super Servant II
J Lauritzen AS (Lauritzen) agreed with Wijsmuller BV (Wijsmuller) to transport a drilling rig using either Super Servant I or Super Servant II. The contract gave Wijsmuller the right to pick which vessel to use. Wijsmuller assigned Super Servant I to another job and chose Super Servant II for Lauritzen’s rig. Before Super Servant II could perform, it sank. Wijsmuller argued the contract was frustrated.
Actions Causing Frustration: The Main Issue
The Court of Appeal ruled the contract was not frustrated. Lord Justice Bingham noted Wijsmuller had a choice between two vessels. By assigning Super Servant I to another contract, Wijsmuller made Super Servant II’s use necessary. The sinking of Super Servant II, though accidental, resulted from Wijsmuller’s own decisions. This amounted to frustration caused by a party’s actions, barring Wijsmuller from using the doctrine. The court contrasted this with cases where an external, uncontrollable event makes performance impossible.
Risk Assignment in the Contract
While frustration caused by actions was central, the court also considered risk assignment. The contract let Wijsmuller select either vessel, implying they accepted the risk of one becoming unavailable. By agreeing to this term, Lauritzen accepted the possibility that either vessel might not be usable. The loss of Super Servant II, though outside Lauritzen’s control, fell under a risk Wijsmuller had agreed to bear. This further supported the court’s rejection of frustration.
Comparing The Super Servant II with Valid Frustration
The Super Servant II differs from cases where frustration applies. In Taylor v Caldwell (1863) 3 B & S 826, a music hall burned down, making performance impossible. The destruction was an unforeseen event outside the parties’ control, frustrating the contract. Unlike Wijsmuller, the parties in Taylor did not contribute to the event or assign the risk in the contract. This shows the difference between true frustration and situations where a party’s actions cause impossibility.
The Significance of The Super Servant II in Contract Law
The Super Servant II remains a key case on frustration. It confirms that parties cannot claim frustration caused by their own actions to avoid obligations. The case also shows how risk assignment in contracts affects frustration claims. If a party accepts a specific risk, events within that risk will not frustrate the contract, even if uncontrollable. This encourages clear drafting to address potential issues. The decision also helps separate true frustration (as in Taylor v Caldwell) from situations where a party’s actions or accepted risks lead to impossibility. Frustration is a narrow rule for unavoidable, unassigned events, not a general excuse for unexpected challenges.
Effects on Contract Drafting and Negotiation
The ruling in The Super Servant II affects how contracts are written and negotiated. Parties must clearly identify and assign risks. Terms like force majeure clauses can address unexpected events and their consequences. Options to pick between performance methods should be drafted with risk assignment in mind. Clear terms reduce disputes over unforeseen events and improve certainty. The case stresses the need for precise drafting to avoid confusion about frustration.
Conclusion
The Super Servant II clarifies frustration caused by actions and risk assignment in contract law. It confirms frustration does not apply when a party’s actions cause impossibility or the contract assigns the risk. The decision aligns with earlier cases like Taylor v Caldwell, showing frustration’s limited scope. For drafting contracts, careful attention to risk assignment is essential to prevent disputes. The Super Servant II remains a foundational case, guiding how courts interpret frustration and manage assigned risks. Its principles continue to influence contract law, offering clarity on frustration’s boundaries and the need for clear terms.
