| Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Lt | |
|---|---|
The Invasion of Poland 1939 |
|
| Court | House of Lords |
| Citation(s) | [1942] UKHL 4, [1943] AC 32, [1942] 2 All ER 122 |
| Case opinions | |
| Lord Wright | |
| Keywords | |
| Frustration | |
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1942] UKHL 4 also known as the Fibrosa case, is a leading English decision of the House of Lords on contract law and the doctrine of frustration.
Contents |
Fibrosa, a Polish company, agreed to buy some machinery for £4800 from Fairbairn, an English-based company. In July 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 collect the £1000, on the basis of total failure of consideration.
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.
Lord Wright said the claim was based on unjust enrichment. At 61 he said,
| “ | It is clear that any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is to prevent a man from retaining the money of or some benefit derived from another which it is against conscience that he should keep. | ” |