Contract Law

Taylor v. Caldwell

(1863) 3 B & S 826; 122 ER 309

Facts

Caldwell agreed to allow Taylor to use the Surrey Gardens and Music Hall for concerts on specified dates.
The continued existence of the music hall was essential to the planned performances.
Before the first concert, the hall was accidentally destroyed by fire.
Neither party was responsible for the destruction.
Taylor had incurred expenses in advertising and preparing the concerts.
He sued Caldwell for failing to make the venue available.
Caldwell argued that performance had become impossible through destruction of the essential subject matter.

Whether the owner was liable for non-performance when the specific venue necessary for the contract was accidentally destroyed.
Whether the contract contained an implied condition that the subject matter would continue to exist.

Where performance depends on the continued existence of a specific person or thing, the law may imply a condition that the person or thing will continue to exist.
If the essential subject matter is destroyed without fault of either party, future performance is discharged.
Neither party is liable in damages for failure to perform obligations that have become impossible due to the supervening event.
The doctrine applies only where the destroyed thing is fundamental, not merely convenient.

The parties had contracted for the use of one particular music hall.
The concerts could not be performed in the agreed manner without that venue.
The agreement was not interpreted as an absolute promise by Caldwell to provide some alternative hall.
The continued existence of the Surrey Gardens hall formed the foundation of the bargain.
Its accidental destruction therefore removed the condition upon which the parties had contracted.
The Court distinguished absolute contractual promises from obligations involving a specific subject matter.
If a party gives an unconditional promise, that party may assume the risk of later difficulty.
But here, the contract necessarily proceeded on the shared assumption that the hall would remain available.
Since neither party caused the fire, imposing damages would unfairly allocate a risk that neither had agreed to bear.
The case introduced the common-law doctrine later known as frustration or impossibility.

The Court held that both parties were discharged from future performance.
Caldwell was not liable for failing to provide the destroyed venue.
Use this case for: destruction of the specific subject matter essential to performance may frustrate and discharge a contract.