Taylor v. Caldwell
3 Best & S. 826 (Unknown Court - UK 1863)
Caldwell & Bishop owned a
music hall in England, and agreed to rent it out to Taylor & Lewis, at
the rate of £100/day.
Taylor planned to use the
music hall for series of summer concerts.
Taylor spent money in
preparation for the concerts (advertising, etc.).
There was no clause in the
contract that said what would happen if there was a problem with the
music hall, except for the phrase "God's will permitting" at
the end of the contract.
You could always write a
clause into a contract about what to do when performance on the contract
becomes impossible, but that wasn't done here.
A week before the first
concert was to be given, the music hall burned to the ground. Taylor sued
the Caldwell for breach of contract
for failing to rent the music hall.
Taylor argued that he should
receive reliance damages for the
money they had paid out to promote the events. He also argued he should
to get benefit of the bargain,
which would be the amount of profit they would have made on the concert
(although it would be hard to calculate that).
Taylor could have tried to mitigate
the damages by covering and renting a different music hall and then
suing for the difference in costs between the new rental and £100/day.
Caldwell argued that is
wasn't his fault the music hall
burned down, why should he be held liable?
The British Court found for
The Court found that because
performance of the contract had become impossible, both parties were excused from their
obligations under their contract.
The Court found that the
rule of absolute liability only
applied to positive, definite contracts, not to those in which there was
an express or implied condition underlying the contract.
The continued existence of
the music hall was an implied condition essential for the fulfillment of the contract.
The destruction of the
music hall was the fault of neither party, and rendered the performance
of the contract by either party impossible.
"It is apparent that
the parties contracted on the basis of the continued existence of the
Even though there was no
fire clause into the contract, the Court assumed that a reasonable
person would have said that the deal was off.
Normally, when there is a
positive, definite contract to perform a thing, the party must perform
it, or pay damages for not doing it.
The Court noted that the
Civil Code of France and the Roman law both say that when the existence
of a particular thing is essential to a contract, and the thing is
destroyed by no fault of the party selling it, the parties are freed from
obligation to deliver the thing.
The Court analogized this
case to a situation in which a contract requiring personal performance is
made, but the performer dies before going onstage. The performer's
estate would not be held liable under the common law of England.
In cases like this, there is
clearly a loss, and clearly a breach
of contract. The question is who the loss falls on.
It's not fair to make the
loss fall on the defendant since they aren't at fault. But it's also not
fair to make the loss fall on the plaintiff, because they aren't at fault
either. But someone has to absorb the loss.
Prior to this case, the
opposite doctrine was followed. In the older landmark case of Parridine
v. Jane (82 Eng. Rep. 897 (K.B. 1647)),
Jane was renting some land from Parridine in England. There was an
invasion. The Court held that the rent must still be paid, come hell or
highwater (or invasion).
In Contract Law, you are can
always be held liable even if you are not at fault. So Parridine fits it better with the US understanding of
For example, see Batsakis
v. Demotsis (226 S.W.2d 673
(Tex.Civ.App.-El Paso 1949)).
On the other hand, the
ruling in this case is similar to the ruling in Hadley v. Baxendale (9 Ex. 341 (Ex.Ct. 1854)), which was decided
about the same time. In both cases, the Court felt that although there
was a large loss, that loss shouldn't fall on the defendant.