Herne Bay Steamboat Co v Hutton [1903] 2 KB 683

Hutton hired a steamship for excursions connected with a planned naval review at Spithead. The written arrangement referred both to viewing the review and cruising around the fleet. A deposit was paid, with the balance due before departure. The review was cancelled because of the King's illness, but the fleet remained assembled. The shipowner sought instructions and payment, then used the vessel itself when Hutton did not proceed. Hutton denied further liability, contending that cancellation had frustrated the agreement. The shipowner sought the balance with credit for its alternative use.

Did cancellation of the naval review frustrate the agreement despite the continuing possibility of the promised cruise around the fleet?

The Court of Appeal held that the cancellation did not frustrate the agreement. The proposed trip was not confined to viewing the naval review: it also included a cruise around the fleet, which remained available. The cancellation reduced the attraction of the venture but did not remove its entire contractual basis.

Hutton had undertaken the commercial risk of finding passengers for the excursion. The shipowner remained ready to provide the agreed vessel service and could recover the balance subject to the allowance made for its own use of the ship. The decision contrasts with a bargain whose shared foundation wholly depended on a cancelled event. It does not establish that every contract with two stated purposes necessarily survives, regardless of their relative importance.

Cancellation of an anticipated event does not frustrate a contract where a substantial agreed purpose remains performable and the lost commercial opportunity falls within the risk undertaken. Identify the shared contractual foundation rather than assuming that reduced profitability or diminished attraction is enough.

Herne Bay is the conventional contrast with Krell v Henry. Both arose from cancelled royal events, but the contractual foundations differed. The continuing possibility of a cruise around the fleet supported performance in Herne Bay. The comparison shows that the occurrence of the same external event does not produce identical legal outcomes for every related contract. Read the undertaking and allocation of risk, then determine whether the remaining performance is radically different rather than merely less valuable.