Bank Line Ltd v Arthur Capel & Co  AC 435
In this case, Bank Line agreed to lease a brand new steamer (boat) for Arthur Capel, for a period of twelve months. However before the boat was delivered, it was requisitioned by the government, for the duration of the war. At that point, it would seem fairly clear that the contract had been frustrated. However a few months later, Bank Line received an offer from a third party, that wished to purchase the steamer outright, if it could be released from the government’s service. Bank Line then made an arrangement with the government, which agreed to release the steamer if a replacement could be provided. This went ahead, and the steamer was sold.
Of course, Capel was unimpressed, because the steamer had not been detained for the duration of the war; in fact, it had been detained for just a mere few months. They sued, and Bank Line responded that the contract had been previously ended by frustration.
The court found that the contract had indeed been ended by frustration, because at the time of the frustrating event, it had not been possible to predict how long the steamer would be unavailable; all that was known for sure was that the delay was likely to be extensive, as it was to last for the entire duration of the war – more than likely, the delay would have been longer even than the period of the lease. Had the likely delay been less, then the event would not have been frustrating.