• The case of Jackson v Union Marine Insurance Co (1874) LR 10 CP 125 concerned the areas of breach of duty and pure economic loss. It was held that the impossible performance of a contract is judged by the purpose of the contract.

Facts of Jackson v Union Marine Insurance Co (1874) LR 10 CP 125

  • The C shipowner entered into a contract charterparty, by which his ship would proceed with all possible dispatch (excluding navigation dangers and accidents) from Liverpool to Newport
  • At Newport cargo of iron rails for San Francisco would be loaded
  • For such, the C bought insurance
  • After sailing from Liverpool in January, the ship required repairs after being grounded; the repairs extended to the end of August
  • In February, the charterers chartered another freight to complete the contract
  • The C brought a claim against his insurance for the loss of the ship due to the sea
  • Breach would not allow for a claim, however frustration of the contract could and therefore that’s what the C argued happened
  • The jury found that by the time the ship was repaired, the contract would not make commercial sense to exist and therefore believed it to be frustrated

Issues in Jackson v Union Marine Insurance Co (1874) LR 10 CP 125

  • Had the contract been frustrated?

Held by the Exchequer Chamber

  • Affirmed the previous courts’ decision. The contract was frustrated, and thus the shipowner was successful in his claim.

Bramwell B

It was not a breach that caused the contract, but rather the task becoming impossible to carry out:

  • “It is manifest that, if a definite voyage had been contracted for, and became impossible by perils of the seas, that voyage would have been prevented and the freight to be earned thereby would have been lost by the perils of the seas.” [142]

The extended time of repairs meant the delivery would take too long of a time, and thus would not be delivered in a reasonable time as implied by the charter [144]

Dissenting Cleasby B

Cleasby B believed that charterparty remained binding upon the C

Citing Justice Lawrence in Hadley v Clarke as authority on the subject of delay, “They contended that the defendants were only bound to fulfil their engagement within a reasonable time; and then argued that, as the embargo prevented the completion of the contract within a reasonable time, the defendants were absolved from their engagement altogether: but it was incumbent on the defendants, when they entered into this contract, to specify the terms and conditions on which they would engage to carry the plaintiff’s goods to Leghorn. They accordingly did express the terms, and absolutely engaged to carry the goods, ‘the dangers of the seas only excepted.’” [134]

  • Thus, Cleasby B believed the current case could not show the contract to be frustrated as the implied term the other judges sitting found was not one of which applied
  • Cleasby B admitted that there were distinguishing factors between the two cases however these made no “difference in the principle, since the contract had been acted on in the present case, and the vessel had been prepared, and had on board all the necessary equipments, and had set sail for the voyage.” [134]

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