- An English company enters into a contract for a Polish company to supply machinery.
- The Polish company pays a $1000 deposit.
- War breaks out, and the contract cannot be performed.
- There was a clause in the contract saying if the contract was frustrated (including if war broke out) it would be suspended for a reasonable amount of time.
- The Polish company sues for the return of the $1000.
- Viscount Simon LJ: The clause mentioned in (4) does not count because this is not a short delay, it is extended (Geipel v Smith).
- You can get money paid back if there is total failure of consideration (e.g, you buy a horse but before it is delivered, it dies), so why can you not get money back due to frustration?
- Chandler v Webster was wrongly decided.
- Atkin LJ: Chandler v Webster creates a position where the person who received the money would be no worse off had he not received it, whereas the reverse is true for the person who paid the money.
- Russell LJ: There was a total failure of consideration and this is why Chandler v Webster was wrong.
- MacMillan LJ: Agreed with reasons above.
- Wright LJ: They could succeed on the basis of unjust enrichment.
The full text is available here: http://www.bailii.org/uk/cases/UKHL/1942/4.html
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