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 Caldwell,
    • 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 particular theater.”
        • 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 Contract law.
      • 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.