Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour

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Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour [1942] 2 All E.R. 122, [1943] A.C. 32, also known as the Fibrosa case, is a leading English decision of the House of Lords on contract law and the doctrine of frustration.

[edit] Background

Fibrosa, a Polish company, agreed to buy some machinery for £4800 from Fairbairn, an English-based company. In July of 1939, Fibrosa made a payment of £1000 as part of the agreement. By September Germany had invaded Poland and Britain had declared war. Fibrosa attempted to get the payment back but Fairbairn refused arguing that the invasion frustrated the contract and so it was not enforceable. Fibrosa brought an action against Fairbairn.

The lower courts followed the decision of Chandler v Webster [1904] 1 KB 493 which stated that when a contract is frustrated, such that completion is impossible, "the loss lies where it falls." That is, the obligations prior to the frustrating event remain but all future liabilities are discharged. Consequently, Fibrosa could not collect on the £1000.

[edit] Opinion of the Court

The House of Lords found in favour of Fibrosa. Viscount Simon was critical of the Chandler case and found that it would only apply where there has not been any failure of the consideration. However, in the circumstances, there was a failure of the consideration as Fibrosa had not received any part of the machinery that was ordered in exchange for the payment. Consequently, the frustrated contract would not follow the rule in the Chandler decision and so Fibrosa could collect.