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Excuses for non-performance
Jacobs, Marcus & Co v. Crédit Lyonnais
(1884) 12 QBD 589 (English Court of Appeal)
Whether an event constitutes an excuse for non-performance of a contract is an issue to be determined by the proper law of the contract.
The judgment of the Court (Brett MR and Bowen LJ) was delivered by BOWEN LJ. [598] The plaintiffs in this case are esparto merchants, carrying on business in the city of London, and the defendants are a banking firm, also carrying on business in the city.
By a contract made in London on October 6, 1880, the defendants agreed to sell to the plaintiffs 20,000 tons of Algerian esparto, to be shipped from Algeria during the year 1881 by monthly deliveries on board ships or steamers to be provided by the plaintiffs: payment to be made by cash on arrival of the ship or steamer at her port of destination. The [599] defendants delivered a portion of the esparto under the contract, but failed to deliver the remainder; and this action was brought by the plaintiffs for its non-delivery. The defendants in their statement of defence admitted the non-delivery complained of, but alleged that the insurrection in Algeria and the military operations connected with it had rendered the performance of the contract impossible; and that by the French Civil Code, which prevails throughout Algeria, force majeure is an excuse for non-performance. The plaintiffs demurred to this defence upon the ground that the contracts were governed by English law and not by the law of Algeria, and further alleged that the defendants or their agents could have procured and shipped esparto from other ports of Algeria where force majeure did not exist. The defendants to the latter allegation rejoined that the insurrection and military operations rendered it impossible to transport such esparto as last mentioned to the place fixed in the contract for approval by the plaintiffs of its quality before shipment, or to transport the same to the place fixed in the contract for shipment. To this rejoinder there was a further demurrer upon similar grounds. The Court of Queen’s Bench having given judgment on both demurrers for the plaintiffs, the case now comes before us upon appeal.
The question which we have in substance to consider is, whether non-performance of their agreement by the defendants can be excused on the ground that military operations in Algeria and the Algerian insurrection had rendered its performance impossible, and that such an excuse would have been recognised by the French Civil Code which prevails in Algeria … .
The first matter we have to determine is, whether this contract is to be construed according to English law or according to French. To decide this point we must turn to the contract itself, for it is open in all cases for parties to make such agreement as they please as to incorporating the provisions of any foreign law with their contracts. What is [600] to be the law by which a contract or any part of it is to be governed or applied must be always a matter of construction of the contract itself, as read by the light of the subject-matter and of the surrounding circumstances. …The broad rule is that the law of a country where a contract is made presumably governs the nature, the obligation and the interpretation of it, unless the contrary appears to be the express intention of the parties. “The general rule”, says Lord Mansfield, “established ex comitate et jure gentium, is that the place where the contract is made, and not where the action is brought, is to be considered in expounding and enforcing the contract. But this rule admits of an exception where the parties at the time of making the contract had a view to a different kingdom”: Robinson v. Bland (1760) 2 Burr 1077. ...
It is obvious, however, that the subject-matter of each contract must be looked at as well as the residence of the contracting parties or the place where the contract is made. The place of performance is necessarily in many cases the place where the obligations of the contract will have to be enforced, and hence, as well as for other reasons, has been introduced another canon of construction to the effect that the law of the place of fulfilment of a contract determines its obligations. But this maxim as well as the former must, of course, give way to any inference that can legitimately be drawn from the character of the contract and the nature of the transaction. …
In the present case the contract was made in London between merchants carrying on their business in the city of London, and payment was to be made in London. Presumably, therefore, we should infer that this was an English contract, and intended to be [602] governed by English law; but it still remains to be considered whether anything in the contract itself or the nature of its stipulations displaces this prima facie view either wholly or in part.
Now it cannot be contended that the parties have in express terms provided that any portion of this contract is to be construed or applied otherwise than according to English law; but it was suggested by the appellants [the defendants] that such an intention ought to be inferred from certain provisions as to the collection of the esparto in Algeria and as to its shipment thence. …
[603] The mere fact that a contract of this description—made in England between English resident houses, and under which payment is to be made in England upon delivery of goods from up-country in an Algerian port—is partly to be performed in Algeria, does not put an end to the inference that the contract remains an English contract between English merchants, to be construed according to English law, and with all the incidents which English law attaches to the non-performance of such contracts.
Now one of the incidents which the English law attaches to a contract is that (except in certain excepted cases, as that of common carriers and bailees, of which this is not one), a person who expressly contracts absolutely to do a thing not naturally impossible is not excused for non-performance because of being prevented by vis major [i.e. a force practically impossible to resist]. “The rule laid down in the case of Paradine v. Jane (1647) Aleyn 26 has often”, says Lord Ellenborough, in the case of Atkinson v. Ritchie (1809) 10 East 530, 533 “been recognised in courts of law as a sound one—that is, that when the party by his own contract creates a duty or charge upon himself, he is bound to make it good if he may—notwithstanding any accident by inevitable necessity : because he might have provided against it by his contract”. ... If inevitable necessity occurring in this country would not excuse non-performance, why should non-performance be excused on account of inevitable necessity arising abroad? So to hold would be to alter the liability which English law attaches to contracts, and would, in the absence of an express or implied intention to that effect, be contrary to authority as well as principle ... .
[604] The contract has absolutely provided that delivery of the esparto shall be duly made; not that the bargain as to such delivery need only be observed when the foreign law would insist upon such observance. The contract being an English contract, only such portions of the French Civil Code can be applied to its provisions as to performance in Algeria as are not inconsistent with the express language of the contract as interpreted according to English law. If the parties had wished in addition to this to incorporate a provision of French law which in the event of vis major would operate to excuse the contracting parties for non-performance, and thus to vary the natural construction of the instrument according to English law, they should have done so in express terms. Read by English law the contract is not susceptible of such an interpretation, and there is nothing to show that in this respect the parties desired the contract to be governed by the French. For these reasons we are of opinion that the judgment of the Court below was right and must be affirmed with costs.
Judgment affirmed
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RA.PIL.08 Jacobs, Marcus v. Credit Lyonnais