GRAVES v GRAVES

[2007] EWCA Civ 660, Court of Appeal (Civil Division), Thomas and Hughes LJJ and Coleridge J, 3 July 2007

Contract – Mistake – Frustration – Implied terms

A tenancy agreement was concluded between former spouses on the common, reasonable assumption that the tenant would be in receipt of housing benefits, to which as it turned out she was not entitled. A condition bringing a contract to an end could be implied only if strictly necessary. While impecuniosity was not a good reason for failure to perform, and Mrs G’s obligation of paying rent could still have been performed without housing benefits, the basis of the agreement was that the rent would be paid by housing benefits and the loss of that basis meant that the agreement was different in kind to that originally contemplated. In the circumstances, there had been an implied term in the contract to the effect that Mrs G would be entitled to housing benefits and as a result, when the Council stated that she was not to enjoy such benefits, the contract had come to an end.