The rule
A later event can defeat the agreed foundation of a transaction even while physical performance remains possible. Identify the principal purpose incorporated into the bargain and the allocation of the event's risk. Krell excused the unpaid balance for the lost procession view but did not adjudicate the abandoned deposit claim.
Elements
- A purpose forming the transaction's shared foundation.
- A later event defeating that foundation, rather than only reducing profit.
- A supported account of why the disappointed party did not bear the risk.
Exceptions and limits
- Knowledge of a destination alone does not necessarily condition an ordinary journey.
- A party's ability to draft more precautions is not by itself proof of actual risk allocation.
When the issue arises
The promised thing can still be supplied. An event is canceled or a planned use disappears after agreement, leaving a buyer or renter claiming that performance has lost the value on which the bargain depended; the question is whether that purpose formed the common foundation of this transaction, not simply whether the disappointed party now has less reason to want it. Identify the distinctive connection. Compare the selected performance with an ordinary service that remains useful for its contracted function. Then examine the allocated risk and the particular payment at issue. Excuse from further performance does not itself settle every refund question.
Why the particular rooms mattered
Krell involved daytime use of Pall Mall rooms for the procession dates, after an advertisement and explanation of their view. Those circumstances made viewing the procession the foundation of the transaction even though the correspondence did not name it.
The court excused the unpaid balance when the procession did not occur. Henry had abandoned his deposit counterclaim, so the decision did not establish a right to recover that deposit. Do not broaden its result to every payment consequence of a frustrated bargain.
The ordinary cab comparison
Vaughan Williams contrasted an ordinary cab hired to reach the Derby. Its agreed journey could still be supplied if the race did not occur; the cab's special suitability to view an event was not the basis of selection.
That comparison tests the actual transaction. Identify the feature that made this performance distinctive, the other party's knowledge and the evidence that both parties built their agreement around the claimed purpose. Mere awareness of one person's motive does not establish that shared foundation.
Purpose and risk require separate proof
Romer's concurrence expressed reservations about the renter's assumption of risk. The report therefore should not be reduced to a rule that any known purpose excuses performance when disappointed.
Read any cancellation or risk clause, the booking conditions and the surrounding facts. The possibility that a careful party could have drafted a clause is not, by itself, an explanation of who bore the risk.
A simple fact pattern
Facts. An organizer rents a meeting room solely for a named televised debate, a purpose both parties make the booking’s foundation. The debate is canceled, but the room remains available. Assume a valid, applicable term expressly assigns that event-cancellation risk to the organizer, who has not paid the final fee.
Analysis. A shared foundation does not end the risk inquiry. On the stated assumptions, the organizer cannot derive an excuse from cancellation alone after accepting that risk. Krell did not decide every possible cancellation charge or refund. Analyze the unpaid fee under the supplied terms, and give any request for return of an earlier payment its own legal basis.
A harder fact pattern
Facts. A traveler hires an ordinary car and driver for a journey to a sporting event. The event is canceled, but the driver remains ready to make the agreed trip; the contract says nothing about admission or viewing facilities.
Analysis. The cab comparison supplies the counterargument: the ordinary journey may remain the performance bargained for, despite the traveler's lost motive. Look for contrary evidence that the parties made the event central to their agreement beyond the ordinary undertaking to provide a journey. The destination's connection to the event does not alone establish that additional premise.
Compared with nearby doctrines
| Doctrine | How it differs |
|---|---|
| Impracticability | Examine burden of supplying the promised performance separately from the disappearance of its agreed purpose. |
| Mutual mistake | A later cancellation differs from a mistaken fact already existing when agreement was made. |
Common exam mistakes
- Treating knowledge of a private plan as conclusive proof of a shared contractual foundation.
- Using frustration merely because anticipated profit fell.
- Assuming every foreseeable event was allocated to the disappointed party.
- Attributing a deposit refund to Krell when that claim was abandoned.
Practice questions
Parties reserve a particular balcony solely to view a named procession on specified dates, discussing its distinctive view. The procession is later canceled, although access remains possible. Under Krell's reasoning, which is the best analysis?
Answer and explanations
Correct answer: D.
Authority: Krell: purpose, risk and deposit limits
- A. Wrong. Frustration can concern the foundation's disappearance while physical performance remains possible.
- B. Wrong. Krell distinguishes a contractual foundation from an ordinary customer's motive.
- C. Wrong. Krell did not adjudicate the abandoned deposit counterclaim.
- D. Correct. The distinctive location, dates and communicated purpose support the foundation argument, but the risk question still matters.
More contracts practice questions and essays
Quick answers
Must the purpose be written in the contract?
Krell found the foundation in the advertisement, explanation and selected use and dates despite its absence from the letters. The evidence still had to link the purpose to the bargain.
Did Krell return the deposit?
The deposit counterclaim had been abandoned. The appellate decision excused the remaining charge, not a litigated entitlement to get the deposit back.
Does knowing the customer's destination make every journey conditional?
The opinion's ordinary-cab comparison resists that conclusion. Distinguish knowledge of a motive from the distinctive foundation of the promised performance.