This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Whether the requisition by the government, of property such as a vessel, discharges a prior contract which involves the use or sale of such property, is a question which some courts have endeavored to solve, in cases arising out of the present war, by the application of the doctrine of frustration of the venture.1 The results which have been reached have not been characterized by such harmony and consistency as to indicate that the doctrine of the frustration of venture will furnish the missing clue to the subject of impossibility of performance in general. On the contrary, the results reached by the application of this doctrine seem more discordant than those reached under the general principles of impossibility of performance.2
It is held that the charter of a vessel is not discharged, as a matter of law, by reason of the fact that the government has requisitioned such vessel.3 In a case in which A chartered a vessel to B for sixty months, with provisions whieh gave to B the right to sublet such steamer to the admiralty or for other purposes, and which contained an exception among other things, of arrests and restraint of princes, it was held that the fact that the admiralty requisitioned such steamer as a transport three years before the termination of such contract, did not operate as a discharge of the contract if B wished to treat the contract as in force.4 In this case, however, B was willing to treat the contract as in effect and to pay the amount provided for therein, and A was the party who contended that the contract was discharged. B's position was due to the fact that he was willing to accept the compensation paid by the admiralty and to continue the contract, while A's position was due to the fact that he preferred to terminate the contract and deal directly with the admiralty. An additional ground for contending that there was such a change of circumstances as to terminate the original contract, was the fact that the vessel was built and chartered as a tank steamer, and that it was altered so as to fit it for transporting troops. This change in use, together with the alterations in the vessel necessary to fit it for such use, was held not to be such a change of circumstances as to terminate the contract.5 The same result was reached in a similar case in which the compensation which was paid by the admiralty was less than the amount which B had agreed to pay to A for the use of the vessel.6 A contract by which A chartered vessels to B, is not discharged by the requisition of such vessels by the admiralty at a time at which the charter has from two years to four years to run.7
14 Smith v. Morse, 20 La. Ann. 220. See Sec. 2673 et seq.
1F. A. Tamplin Steamship Go. v. Anglo-Mexican Petroleum Products Co. , 2 A. C. 307 [affirming (1016), 1 K. B. 485, which affirmed , 3 K. B. 668]; Anglo-Northern Trading Co. v. Emlyn Jones , 2 K. B. 78.
2 See ch. LXXVIII.
3 F. A Tamplin Steamship Co. v. Anglo-Mexican Petroleum Products Co. , 2 A a 307 [affirming (1016),
1 K. B. 485, which affirmed (1015), 3 K. B. 668]; Modern Transport Co. v. Duneric Steamship Go. , 1 K. B. 370 [affirming (1016), 1 K. B. 726]; Chinese Mining & Engineering Co. v. Sale , 2 K. B. 500; Earn Line Steamship S. Co. v. Sutherland Steamship S. Co., 254 Fed. 126.
4 F. A Tamplin Steamship Co. v. Anglo-Mexican Petroleum Products Co. , 2 A C. 307.
A contract by which a vessel is to be chartered for twelve months after it is delivered, and which gives to the charterers an option to terminate the contract if the vessel is not delivered by a specified time, is discharged by the requisition of such vessel by the admiralty before such time for delivery.8 The requisition of a vessel by the admiralty at a time at which the charter has about five months to run, operates as a discharge, at least if it is understood that the vessel is requisitioned for the period of the war and if it is also understood that the war will probably last more than five months.9 A contract by which A chartered a vessel to B for twelve calendar months, is held to be discharged by the requisition of such vessel by the admiralty at a time at which the charter has about four months to run.10 In this case A sought to recover from B the compensation fixed by the contract, and B contended that the contract was discharged.11
The result of holding that a charter is not discharged by governmental requisition is that the compensation which is paid by the government must be paid to the charterer if the vessel is used by the government for the purposes and in the manner prescribed by the charter.12 If the government uses the vessel outside of the limits fixed by the eharter and for purposes for which it could not have been used under the charter, the government is evidently using the interest of the owner in part, as well as the interest of the charterer in part; and the compensation paid by the government must be apportioned between the owner and the charterer according to their respective interests.13 If the charter provides that the compensation to be paid for the vessel is to cease when the vessel is lost, the charterer is not entitled to compensation for the vessel which is paid by the government on the loss of the vessel.14
5 F. A. Tamplin Steamship Co. v. Anglo-Mexican Petroleum Products Co. , 2 A. C. 307 [affirming (1916), 1 K. B. 485, which affirmed (1915), 3 K. B. 6681.
6 Modern Transport Co. v. Duneric Steamship Co. [19171, 1 K. B. 370 [affirming (1916), 1 K. B. 7261.
7 Chinese Mining & Engineering Co. v. Sale , 2 K. B. 599.
8 Bank Line v. Capel [19191, A. C. 435.
9 Countess of Warwick Steamship Co. v. Le Nichel Society Anonyme [19181, 1 K. B. 372.
10 Anglo-Northern Trading Co. v. Emlyn Jones [19171, 2 K. B. 78.
11 Anglo-Northern Trading Co. v. Emlyn Jones [19171, 2 K. B. 78.
A contract for the transportation of freight by a certain steamship is not discharged by the fact that the owner voluntarily charters such steamship to the government for use during the war.15 It is said, however, that such contract would have been discharged if the government had requisitioned such vessel.16 contract for the sale of specified wheat to be delivered in the war is discharged by the fact that the government has requisitioned such wheat.17
Under a statute 18 which provides that compliance with the government orders shall be obligatory and that such orders shall take precedents over all other orders and contracts, a prior contract is discharged if a government order has been placed which takes up so much of the capacity of the manufacturing plant that performance of the prior contract is impracticable.19 Even under such a statute, a government order does not bperate as a discharge if the government did not compel the manufacturer to accept the order and did not intend to use its powers of compulsion, and if the manufacturer voluntarily entered into such contract with the government.20 The federal legislation for food administration was not intended to affect the performance of prior contracts, and it did not have such effect.21
12 Earn Line Steamship S. Co. v. Sutherland Steamship S. Co., 254 Fed. 126.
13 Chinese Mining & Engineering Co. v. Sale , 2 K. B. 909. (A complete discussion of the rules for fixing the value of the respective interests, and for apportioning the compensation to be paid by the government, is found in this case.)
14 London-American Maritime Trading Co. v. Rio De Janeiro Tramway, Light & Power Co. , 2 K. B. 611.
15 Graves v. Miami Steamship Co., 61 N. Y. Supp. 115, 29 Misc. 645.
16 Graves v. Miami Steamship Co., 61 N. Y. Supp. 115, 29 Misc. 645.
17In re Shipton , 3 K. B. 676.
18 39 St. at L. 213. o. 134, * 120.
19 Moore v. Roxford Knitting Co., 250 Fed. 278; Mawhinney v. Milbrook Woolen Mills, 172 N. Y. Supp. 461, 106 Misc. 99.