Frustrated Charter Party

The doctrine of frustration will not apply when the time charterer has the use of the vessel for some purpose for which he is, under the terms of the time charter, entitled to use her even though the particular purpose is not the particular purpose for which he desires to use her. The interruption must be such as to destroy the whole basis of the contract. The test is the estimate which a reasonable business man would make of the probable period during which the vessel’s services would be lost to the charterer. In Port Line – v – Ben Line Steamers (1958) a requisitioning of a vessel for a period of 3 to 4 months was held not to frustrate a charter party of 30 months. Impossibility of performance – Where performance of a contract depends on the continued existence of a given person, thing or set of circumstances, a condition will generally be implied that if, without the fault of either party, performance becomes impossible owing to the fact that the person, thing or set of circumstances has ceased to exist, the parties to the contract will be discharged from liability for further performance. In Joseph Constantine SS Line Ltd v Imperial Smelting Corporation Ltd. (1942) an explosion on board a ship was held to have frustrated the charter party. Where supervening events, not owing to the fault of either party, render the performance of a contract indefinitely impossible and there is no understanding to be bound in any event, frustration ensues even if the parties may have expressly provided for the case of a long interruption. Where one of the parties relies on the frustrating event as releasing him from further contractual liability, the onus of proof as to whether or not the impossibility was due to his default may be important.