## Facts

- Ocean Trawlers Ltd, the respondents, owned a steam trawler equipped with an otter trawl and chartered it to Maritime National Fish Ltd, the appellants, for use in the fishing industry.
- The charterparty was renewed in October 1932 for an additional year.
- Both parties knew that Canadian law required a government-issued license to operate an otter trawl.
- In March 1933, the appellants requested licenses for five trawlers, but the authorities granted only three licenses.
- The appellants had to select which three vessels would receive licenses and chose their own trawlers rather than the chartered vessel.
- After failing to allocate a license to the chartered vessel, the appellants claimed the contract was frustrated and ceased paying hire, arguing performance was impossible because the vessel could not be used legally for fishing.

## Issues

1. Whether the doctrine of frustration applied when impossibility of performance was caused by the appellant’s own decision rather than an unforeseen external event.
2. Whether the denial of a license for the chartered vessel constituted frustration sufficient to discharge the appellants from their contractual obligations.

## Decision

- The Privy Council held that the contract was not frustrated.
- The impossibility of performance arose directly from the appellants’ own decision to allocate licenses to other vessels, not from an external or unforeseen event.
- The appellants remained liable for the hire of the vessel under the charterparty agreement.
- The Council emphasized that self-induced inability to perform does not permit a party to invoke the doctrine of frustration.

## Legal Principles

- Frustration requires that the impossibility of performance arise from an unforeseen, external event and not from the voluntary actions or decisions of a party.
- A party cannot escape contractual obligations by making choices that directly cause the inability to perform the contract.
- Contractual responsibility remains with the party possessing decision-making power relating to performance conditions, and the courts will not intervene to relieve a party from self-induced difficulties.
- The doctrine of frustration is not a mechanism to avoid contractual obligations because of a party's own election or preference.

## Conclusion

The Privy Council confirmed that frustration of contract does not apply where the supervening impossibility results from a party's own actions or choices; contractual obligations remain enforceable in such circumstances, and parties must carefully manage licensing and risk in commercial agreements.


Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] AC 624