• In the case of Herne Bay Steam Boat co v Hutton 1903 2 K.B 633 it was held that the claimants were able to recover the price agreed upon minus any profit; due to the contract not operating as a demise of the ship and the contract had not been frustrated.

Facts of the Case

  • As a result of the public announcement of an intended Royal Naval review at Spithead on June 28th, 1902, an agreement in writing was entered into between the claimants and defendant that the claimants steamship Cynthia should be “at the disposal” of the defendant on June 28th to take passengers from Herne Bay “for the purpose of viewing the naval review and for a day’s cruise round the fleet’; also on June 29th for similar purposes: price 250l. payable, 50l down, balance before ship leaves Herne bay”
  • The defendant upon signing the agreement, paid the 50l. deposit.
  • The review was officially cancelled on 25th June.
  • The claimants were wired to the defendant for instructions, stating that the ship was ready to start, and also requesting payment of the balance.
  • Upon receiving no reply, the claimants on June 28th and 29th, used the ship for their own purposes and thereby making a profit.
  • The defendant repudiated the contract in toto on the 29th June.
  • The claimant’s sought to recover the balance less the profits made by their use of the ship during the two days.  

Issues in Herne Bay Steam Boat co v Hutton 1903 2 K.B 633

  • Could the claimants recover the balance of the payment minus the profit?
  • Was the contract frustrated?

Held by Court of Appeal

  • Claimants able to recover

Stirling LJ

  • It was held that [1] the venture was the defendant’s, the risk being his alone; and
  • [2]. The happening of the naval review was not the sole abasis of the contract, so that there had been no total failure of consideration, nor a toral destruction on the subject matter of the contract.
  • The contract did not operate as a demise of the ship
  • The contract had not been frustrated.
  • “It is said that, by reason of the reference in the contract to the ” naval review,” the existence of the review formed the basis of the contract, and that as the review failed to take place the parties became discharged from the further performance of the contract, in accordance with the doctrine of Taylor v. Caldwell. (2) I am unable to arrive at that collusion. It seems to me that the reference in the contract to the naval review is easily explained ; it was inserted in order to define more exactly the nature of the voyage, and I am unable to treat it as being such a reference as to constitute the naval review the foundation of the contract so as to entitle either party to the benefit of the doctrine in Taylor v. Caldwell. (2) I come to this conclusion the more readily because the object of the voyage is not limited to the naval review, but also extends to a cruise round the fleet. The fleet was there, and passengers might have been found willing to go round it. It is true that in the event which happened the object of the voyage became limited, but, in my opinion, that was the risk of the defendant whose venture the taking the passengers was.
  • For these reasons I am unable to agree with the learned
    judge in holding that in the contemplation of the parties the taking place of the review was the basis for the performance of HEBNE S from its performance. The contract, and I think that the defendant is not discharged . I also agree that there is no evidence that the plaintiffs (repudiated the contract before any breach by the defendant.
  • Appeal allowed P.692-693

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