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of an enemy subject so situated is the same as that of a British subject resident in this country, whether the contract was made before or during the war. At any rate, contracts of the following nature made during the war by enemy subjects in these circumstances have been upheld—loan of money and sale of goods?, power of attorney for sale of leaseholds followed by an agreement for sale by the attorney2; and there appears to be no reason why the same rule should not prevail generally. Nor does temporary3 or lasting 4 internment of the enemy affect the validity of the contract, at least where the internment is normal and is not the result of hostile attitude or some overt hostile act5; and it would seem to follow that a contract otherwise valid could be made during internment.
B AND C. CONTRACTS BETWEEN ALLIED AND ENEMY RESIDENTS
OR BETWEEN NEUTRAL AND ENEMY RESIDENTS. These are from their nature not likely to come before our Courts in their contractual aspects, though our Prize Court may have to do with them either in case (B) as constituting trading with the enemy, the prohibition of which each ally will enforce by condemnation not only upon its own but its Allies' subjects as being injurious to the common cause, or in case (C) as contraventions of the law relating to Contraband, Blockade, Unneutral Service, or of analogous measures for crippling the resources of the enemy such as the British Retaliatory Orders in Council of March 1915 and February 1917. Thus in The Panariellose the President of the Prize Court (Sir Samuel Evans), in condemning the property of a French company which (though in good faith) had had commercial intercourse immediately after the outbreak of war in
1 Schaffenius v. Goldberg (1916) 1 K. B. 284 (C. A.). 2 Tingley v. Müller (supra).
3 Nordman v. Rayner and Sturges (1916) 33 T. L. R. 87-a case of a contract of agency made before the war.
4 Schaffenius v. Goldberg, supra.
connexion with a pre-war contract of sale of the cargo seized as prize, stated the rule to be that where the
illegal intercourse is proved between allied citizens and the enemy, their property engaged in such intercourse, whether ship or cargo, is subject to capture by any allied belligerent, and is subject to condemnation in that belligerent's own Prize Courts.'
Again, in an action brought by a Belgian firm carrying on business in Antwerp and London upon a pre-war contract with a German firm carrying on business at Hamburg and, before the war, in London, Bray J. held that there was no breach of the contract, as it became illegal and was dissolved by the outbreak of war. It was just as illegal for the subjects of an ally to have intercourse with the enemy as it was for British subjects.
With regard to dealings between 'Neutral and Enemy Residents,' the law administered by the Prize Court allows the neutral whom the outbreak of war finds with a commercial domicile in the enemy country, a locus poenitentiae in which to dissociate himself from the enemy, and the matter was fully discussed by the Judicial Committee in the present war in the case of The Anglo-Mexicana. 6. 7 .
D. CONTRACTS BETWEEN BRITISH RESIDENTS (or persons resident in British, Allied or Neutral territory).
There was a widespread impression amongst laymen upon the outbreak of the recent war that any person who was thereby disabled from, or inconvenienced in, carrying out a contract was at liberty to treat it as dissolved by the war; that therefore you need not pay for rooms or a house you had engaged for your summer holiday; that you could dismiss employees without notice; or that you were not bound to complete a contract to buy land or shares. The error of such views was quickly demonstrated by the Moratorium Proclamations and the statute, passed on the 3rd August, 1914, called the Postponement of Payments Act, 1914, which provided that
1 Kreglinger & Co. v. Cohen (1915) 31 T. L. R. 592. 2 (1918] A. C. 422.
His Majesty may by Proclamation authorize the postponement of the payment of any bill of exchange or of any negotiable instrument or any other payment in pursuance of any contract, [notice, whether in existence at the outbreak of war or not) to such extent, for such time and subject to such conditions or other provisions as may be specified in the Proclamation.' The Act was expressed to remain in force for six months and numerous Proclamations were made under it. Both these and the Act itself soon expired, and provision to meet cases of hardship was made by a series of Courts (Emergency Powers) Acts. The Bills of Exchange Act, 1914, (which also was temporary) was passed to meet difficulties arising out of the war.
Now the point which concerns us is this, that these emergency statutes show that the general rule is that impossibility or inconvenience arising from war is no defence to an action for breach of contract, so that it is for us to find the exceptions to this rule. If authority is needed for this, it is to be found in the case of Paradine v. Janel an action in debt for rent, in which the defendant pled that he had been dispossessed by the army of a certain German Prince, by name Prince Rupert, an alien born. * And this difference was taken, that where the law creates a duty or charge and the party is disabled to perform it without any default in him, and hath no remedy over, there the law will excuse him. As in the case of waste, if a House be destroyed by Tempest, or by Enemies, the Lessee is excused... but 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.' That is the general rule. There are however some exceptions:
(1) by the common law, a common innkeeper and a common carrier are not liable for loss of, or damage to, the goods entrusted to their care in terms of their common law liability
1 (1647) Aleyn 26.
when such loss or damage is caused by the King's enemies, which would include destruction and damage by air raids, bombardment, etc.:
(2) when the parties have expressly provided in their contract that the fact of war or the consequences of war shall afford a defence.
For instance, since the Agadir incident in 1911 it has become almost universal for marine insurance policies to contain some form of F.C. and s. clause-Warranted free of capture, seizure, arrest, restraint, or detainment and the consequences thereof, etc.... 'leaving the owner of the property free to effect a separate insurance against war risks, or to arrange with his underwriters to delete this clause upon payment of an extra premium.
An early recognition of the need of making special provision against the occurrence of war is found in the year 1340 in Y.B. Pasch. 14 Edw. III. (Rolls Series, p. 128), where it appears that in a charter of the King granting to the Abbot of Ramsey and his successors the right of holding a fair at St Ives in return for a farm of £50 since assigned to the plaintiff in this case, it was provided in the King's charter that ‘if the merchants should be disturbed by reason of war in his realm, so that they could not come there nor make their profit, the suit of the fair should cease for the time.' The report continues and we'(the defendant's counsel) tell you that by reason of the war between the King and the French the merchants, etc., have been hindered from coming there; judgment whether for that time we shall, in opposition to the charter, be charged.' Ultimately it was held that there had been no war 'in his realm,' and the plaintiff recovered.
(3) Where the outbreak of war renders the performance of the contract by one or both of the parties illegal, for instance, as involving intercourse by a ‘British or allied resident' with an enemy resident. Thus in Esposito v. Bowden1 where a
1 (1857) 7 E. and B. 763. See also Avery v. Bowden (1856) 5 E. and B. 714. For an instance during the recent war, see Ross v. Shaw (1917] 2 I. R. 367
British subject before the Crimean War broke out chartered an Italian ship to go to Odessa and there load a cargo, and war broke out before she reached Odessa, it was held that since the outbreak of war made it illegal for the British subject (though not for the Italian plaintiff) to trade with Odessa, he could not be compelled to pay damages for refusing to load.
It is submitted that it would equally be open to an alien of any nationality other than enemy to plead illegality arising from a war in which his country was involved.
(4) Where impossibility arises from some act of the Executive done in pursuance of statutory powers, such as the Defence of the Realm Act, or in pursuance of common law powers to provide for the defence of the realm.
This is in effect equivalent to a change of the law of our own country which when producing impossibility amounts to a defence, and we may cite Baileyv. De Crespignyl as an authority. There a railway company acting under compulsory statutory powers purchased the defendant's land and built a railway station upon it contrary to the provisions of a restrictive covenant as to building which the defendant had given to the plaintiff, a prior purchaser of an adjoining plot. This was held to excuse the defendant, on the ground that Parliament has ‘repealed the covenant,' as it was put in Brewster v. Kitchina.
Instances occur to one of property being requisitioned though specifically subject to a contract for hire or sale: a reservist being unable to perform a contract of service by reason of mobilisation: a house being demolished as impeding the operations of a gun: the billeting of soldiers whereby a householder is unable to fulfil a contract with a lodger.
But the question of supervening impossibility of performance has demanded so much attention of the Courts during the war and bids fair to leave so permanent a mark upon our law that we have considered it deserving of separate treatment in the chapter now immediately following.
1 (1869) L. R. 4 Q. B. 180. 2 (1697) 1 Ld. Raym. at p. 321; 1 Salk. 198.