Boris Ignachkov Have you heard of the Appleby v Myers (1867) case? It’s a really interesting case that law students often study when they’re learning about contract law. It deals with all the tricky stuff that comes up when you’re trying to fulfil a contract and something unexpected happens that makes it impossible. In this case, they explore what happens when external factors beyond the control of the contracting parties intervene.
Legal Principles and Key Points in Appleby v Myers
- In the case of Appleby v Myers [1867] L.R. 2 C.P. 651, it was held that there is no restitution available where the work is completed satisfactorily but the work is subsequently destroyed by an event beyond the control of both parties. The destruction confers no benefit to either party, and there is no reason why the party who has completed their contract obligations should suffer.
Facts of the Case Appleby v Myers
- C contracted D to erect certain machinery on D’s premises at specific prices for portions, and to keep it in repair for 2 years. The price for the work was to be paid after the end of that 2-year period.
- During the production of the machinery, D’s premises, and the materials inside were destroyed by an accidental fire.
- C sued D for the recovery of the sum of the completed work and was successful at first instance. D appealed to the Court of Exchequer Chamber.
Issues in Appleby v Myers
- Was C entitled to recover the sum for the completed work where the destruction was accidental (D not being at fault)?
Held by the Court of Exchequer Chamber
- Finding for D, that both parties were excused from the contract after the fire. Where there is a contract according to the terms used in the present case, C is not entitled to recover anything until the work is completed, unless it is shown that fulfilment of the contract was prevented by D’s defaulting on the contract. C was not entitled to sue in respect of the portions of the work which had been completed at the time of destruction.
Blackburn J.
- The Court below assumed that the property in the work that had been completed passed onto C, which is true. There is no doubt that the general principle is that payment cannot be claimed until completion of the contract. But the law has, for general convenience, allowed for exceptions.
- An exception was established in Planché v Colburn [1831]. This established that if the full performance of the work had been prevented by D’s own act, the law would imply a contract to pay a reasonable sum for the work completed.
- However, suppose a riotous mob entered D’s premises and broke the machinery before the work was completed. According to the principle, D would be excused from repairing and completing the work. Neither party being at fault, the question is, which is to be the sufferer. The work being out of the control of D, and C being the owner, the maxim ‘res perit domino suo’-the destruction of the thing is the loss of its owner-applies.
- D has also suffered because the work being done on their premises would increase the market value of the premises. The Court will construe the contract as to carry out, if possible, the intention of the parties. It is evident that both parties here contemplated the premises continuing to exist in a condition to receive the work, and there was no intention to claim or pay for the machinery until the whole was completed.
- “The whole question depends upon the true construction of the contract between the parties. We agree with the Court below in thinking that it sufficiently appears that the work which D agreed to perform could not be performed unless D’s premises continued in a fit state to enable D to perform the work on them; and we agree in thinking that, if by any default on the part of D, his premises were rendered unfit to receive the work, C would have had the option to sue D for this default, or to treat the contract as rescinded, and sue on a quantum meruit. But we do not agree with them in thinking that there was an absolute promise or warranty by D that the premises should at all events continue so fit. We think that where, as in the present case, the premises are destroyed without fault on either side, it is a misfortune equally affecting both parties, excusing both from further performance of the contract, but giving a cause of action to neither” [659].
Significance of the Case in Legal Development
This case is critical for understanding how English law handles contract disruptions caused by external events:
- Hadley v Baxendale (1854) – Established the principle of foreseeability in contract law, which impacts claims for damages.
- Victoria Laundry (Windsor) Ltd v Newman Industries Ltd (1949) – Explored consequential losses due to breach, relating back to principles seen in Appleby v Myers.
- Tsakiroglou & Co Ltd v Noblee Thorl GmbH (1962) – Dealt with the impossibility of performance, further elaborating on the doctrines applicable in Appleby v Myers.
Exam Questions and Answers
Below, you will find answers to questions that are most commonly asked based on this case.
What are the current legal standards for assessing damages when a contract is terminated due to unforeseen events?
Under UK law, damages for unforeseen events ending a contract are assessed based on the principle of putting the injured party in the position they would have been had the contract been performed. The doctrine of frustration applies, as outlined in Taylor v Caldwell (1863), where a contract may be deemed frustrated if an unforeseen event makes performance impossible, not merely harder or more expensive. For example, in National Carriers Ltd v Panalpina Ltd (1981), the court held that the lease was frustrated when the premises became inaccessible, relieving the parties from their contractual obligations.
How does modern contract law address the allocation of risk for accidental destruction?
Modern contract law often addresses risk allocation through detailed contract clauses that specify responsibility for losses from accidental destruction. For example, force majeure clauses are used to exempt parties from liability for natural and unavoidable catastrophes that interrupt the expected course of events and prevent participants from fulfilling obligations. The effectiveness of these clauses was examined in cases like Holcim (Australia) Pty Ltd v Blue Circle Southern Cement Pty Ltd (2011), emphasizing the necessity of explicit terms to manage such risks effectively.
Are there any recent cases that have revisited the principles established in Appleby v Myers concerning contract frustration?
Recent cases continue to evolve the principles established in Appleby v Myers. For instance, the concept of frustration was notably discussed in Edwinton Commercial Corporation v Tsavliris Russ (Worldwide Salvage & Towage) Ltd (The Sea Angel) (2007), where the court looked at whether the contract’s fundamental basis had changed unexpectedly and permanently, rendering performance something radically different from that initially agreed upon.
