• In the case of Fibrosa Spolka Akoyjna v Fairbairn Lawson Combe Barbour Ltd 1943 AC 32, it was held there was a total failure of consideration and common law restitution was available prior to termination of the contract through frustration.

Facts of the Case

  • A polish company (C) contracted to purchase machines from an English company (D)
  • An advanced payment of £1000 was made by C.
  • War commenced between Nazi Germany and Poland and as a result made exports to Poland illegal.
  • Consequently, C sued by way of a refund for the £1000.

Issues in Fibrosa Spolka Akoyjna v Fairbairn Lawson Combe Barbour Ltd 1943 AC 32

  • Can C recover the deposit of £1000?

Held by House of Lords

  • Appeal allowed.

Lord Wright

  • Here, the law provides remedies for unjust enrichment to prevent a man from retaining the money derived from another which is against conscience that he should keep.
  • “The question whether the payment of the 1000/. in advance in the present case was a ” final payment ” or not depends on no general principle of law but on the wording of the contract in this particular case. To my mind, clearly it was not. The contract was for the sale of machines c.i.f. Gdynia. It is true that there was an additional provision for the services of a skilled monteur, but, in my view, the contract would have been substantially fulfilled by shipping the goods to Gdynia and furnishing the requisite documents against payment of the balance of the price, though a failure to provide a monteur might have given rise to a claim for damages. The price was a lump sum price to be paid in two portions, namely, one- third with the order, balance against shipping documents, but the sum payable in advance was part of the lump sum price payable for the completed articles. The goods remained the property and at the risk of the sellers until the documents were presented and taken up. The case seems to me to come exactly within the principle of s. 7 of the Sale of Goods Act, 1893, and had they been destroyed by enemy action I cannot doubt but that the advance portion of the price would have been recoverable. That the inability of the respondents to implement their contract was due to supervening illegality and not to destruction of the subject-matter appears to me to make the appellants’ claim at least no weaker. Whether it strengthens it has not been discussed and is unnecessary to determine.” Pg83

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