The case Gamerco SA v ICM/Fair Warning (Agency) Ltd & Missouri Storm Inc [1995] 1 WLR 1226 is a well-known English case on the doctrine of frustration and the operation of the Law Reform (Frustrated Contracts) Act 1943. Here’s a summary of the case.

Case Name: Gamerco SA v ICM/Fair Warning (Agency) Ltd & Missouri Storm Inc

Citation: [1995] EWHC 1 (QB); [1995] 1 WLR 1226; [1995] CLC 536; [1995] EMLR 263

Court: England and Wales High Court (Queen’s Bench Division)

The learned Judge: Justice Garland

Judgment Date: 31 March 1995

Parties: Gamerco SA (Spanish concert promoters) and ICM/Fair Warning (representing Guns N’ Roses).

Area of Law: Contract Law, Doctrine of Frustration

Facts: Gamerco SA v ICM/Fair Warning (Agency) Ltd

Gamerco SA (plaintiffs) were Spanish promoters engaged to organize a Guns N’ Roses concert in Madrid at the Vicente Calderón Stadium on 4 July 1992.

The contract guaranteed the band $1.1 million or 90% of net ticket sales. Gamerco had already paid $412,500 in advance.

On 30 June 1992, engineers found the stadium unsafe (constructed with high alumina cement). On 1 July 1992, Madrid City Council revoked the permit and banned use of the stadium. Alternative venues were not available, so the concert was cancelled.

Gamerco sought to recover the advance. The defendants (ICM & Missouri Storm Inc.) counterclaimed, alleging breach by Gamerco and seeking further sums.

Legal Issues

1. Was the contract frustrated due to external events beyond either party’s control?

2. Under Section 1(2) of the Law Reform (Frustrated Contracts) Act 1943, could Gamerco recover the advance payment?

3. Could the defendants offset their incurred expenses against the refund?

Court’s Decision in Gamerco SA v ICM/Fair Warning (Agency) Ltd

The High Court held that Gamerco was deemed to have used reasonable endeavours to obtain the permit. They weren’t liable for guaranteeing it remained valid after issuance.

The ban by authorities rendered the contract physically and legally impossible. The contract was frustrated, through no fault of either party.

Under s.1(2) of the Law Reform (Frustrated Contracts) Act 1943, sums paid before frustration are recoverable. Gamerco was entitled to repayment of the $412,500 advance. The further $362,500 balance was not payable.

The defendants claimed US $182,000 in expenses. The Court accepted some loss but found the evidence inadequate. It allowed only US $50,000 as a “robust assumption.” However, ultimately the Act allows for recovery of monies paid, but with judicial discretion to consider fairness in deducting expenses. That is, the court has the discretion in handling expenses. In this case, the court found that, given the promoters’ significant losses, it was just not to allow any set-off for the defendants’ preparatory costs.

Holding:

Contract was frustrated.

Plaintiffs recovered US $412,500 advance (less a small sum already refunded, net sum: US $385,708).

Defendants’ counterclaim dismissed. They were not awarded costs/expenses.

Legal Significance

This case illustrates how frustration applies when performance becomes impossible due to external events (unsafe venue, authority ban). Money paid in advance can be recovered if a contract is frustrated.

References:

• https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/QB/1995/1.html
• https://ipsaloquitur.com/contract-law/cases/gamerco-v-icm-fair-warning-agency/

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