Lauritzen A/A v Wijsmuller B.V. [1989] EWCA Civ 6 (12 October 1989)

Wijsmuller contracted to transport Lauritzen's drilling rig using either Super Servant One or Two. Super Servant Two sank before performance. Wijsmuller allocated Super Servant One to other contracts and claimed frustration. The Court of Appeal held the contract was not frustrated because Wijsmuller's election determined which contract could not be performed.

Facts

Lauritzen, owners of a drilling rig named Dan King, contracted with Wijsmuller, specialist sea carriers, for transportation from Japan to the Rotterdam area. The contract dated 7th July 1980 specified that carriage would be by ‘Super Servant One or Super Servant Two in Wijsmuller’s option’. On 29th January 1981, Super Servant Two sank in the Zaire River before the time for performance. Super Servant One had been scheduled for other contracts during the relevant period. Wijsmuller informed Lauritzen they would not perform the contract with either vessel and claimed the contract was frustrated or that they were entitled to cancel under clause 17 of the contract.

Contractual Provisions

Clause 17 provided Wijsmuller with a right to cancel in the event of force majeure, Acts of God, perils or danger and accidents of the sea, and similar circumstances which might reasonably impede, prevent or delay performance. Clause 15 imposed a duty of care, and clause 16 exempted Wijsmuller from liability for loss or damage to cargo howsoever caused unless by deliberate act.

Issues

The preliminary issues were: (1) Whether Wijsmuller could cancel under clause 17 if the loss of Super Servant Two was (a) without negligence or (b) caused by negligence; and (2) Whether the contract was frustrated in either scenario.

Judgment

Clause 17 and Negligence

Lord Justice Bingham held that clause 17 did not entitle Wijsmuller to cancel where the event relied upon was caused by their negligence. Although ‘perils of the sea’ could technically include events caused by negligence, the clause’s general tenor, opening with force majeure and Acts of God, pointed towards events beyond Wijsmuller’s control. The clause did not expressly permit cancellation where negligence caused the event, unlike clause 16 which clearly exempted negligence. The court applied a broad approach similar to Canada Steamship principles, concluding the clause should not allow cancellation where reasonable care could have prevented the event.

Frustration

The Court rejected the frustration defence on multiple grounds. Since the contract permitted either vessel to be used, the loss of one did not render performance impossible or radically different. More fundamentally, frustration must occur automatically without depending on a party’s election. Here, Wijsmuller could have performed with Super Servant One but elected to use it for other contracts. Relying on Maritime National Fish Ltd v Ocean Trawlers Ltd, the Court held that where a party’s own choice determines which contract cannot be performed, frustration cannot be invoked.

Lord Justice Dillon agreed, emphasising that the essence of frustration is that it should not be due to the act or election of the party seeking to rely on it.

Implications

This case affirms important principles regarding frustration. A party cannot rely on frustration where performance remains possible through available alternatives and their own election determines non-performance. The decision also confirms that cancellation clauses conferring extensive rights should not, without clear words, be construed to permit cancellation where the triggering event results from that party’s negligence. The case distinguishes between force majeure clauses in commodity contracts and the doctrine of frustration, emphasising that frustration operates automatically by law rather than depending on commercial decisions.

Verdict: Appeal dismissed. The contract was not frustrated and Wijsmuller were not entitled to cancel under clause 17 if the loss of Super Servant Two was caused by their negligence.

Source: Lauritzen A/A v Wijsmuller B.V. [1989] EWCA Civ 6 (12 October 1989)