P agreed to buy machinery from D and paid a deposit, but before delivery P’s country (Poland) was invaded by Germany so that P would be unable to use the machine and claimed back their £1000, arguing that the contract was frustrated. HL allowed P’s claim.
Viscount Simon LC: If a contract provides for what will happen in such circumstances, that governs the matter. However here there was no such term. There is a difference between contracts that are void from the start due to their being illegal etc, and contracts which are rendered impossible by supervening events, frustration applying to the latter and merely releasing the parties from future duties, not undoing past duties. Total lack of consideration applies as much to cases where frustration has occurred due to supervening circumstances as it does to cases of the destruction of the thing. The consideration needed for forming a valid contract (which can be merely a promise) is not the same as consideration which had failed (lack of performance). This conclusion obviates the harshness of the former arbitrary rule that sums paid prior to frustration were not recoverable. But it does itself create problems where one party has incurred great expenses in pursuance of the contract, only for it later to be frustrated. CW also points out that only “total” failure of consideration was admitted i.e. partial or trivial consideration would prevent recovery of the sums paid. NB This is BEFORE the above act was made