This article is written by Rishabh Soni, 3rd-year law student, Amity law school Delhi. He discusses the doctrine of Frustration under the Indian Contract Act 1872.
Frustration in general scenario means defeated and this term has been widely used in agreements and contract between parties. The term frustration is being used to deal with unsuccessful transactions which could not be completed due to any reason. In law of contracts doctrine of frustration has emerged as one of the most common issues which have arrived to deal with failed contracts.
Doctrine of Frustration
As general rule parties to contract are having an intention towards the fulfillment of their part and in case of breach, party breaching is liable to compensate for the same. But an exception to this rule is laid down in Section 56 of the Indian contract act 1872. Section 56 deals with the doctrine of frustration as being acts which cannot be performed. Under this doctrine a promisor is relieved of any liability under a contract in the event of the breach of contract and contract will be deemed to be void.
Section 56 is based on the maxim “ les non cogit ad impossibilia” which means that the law will not compel a man to do what he cannot possibly perform.
The basis of the doctrine of frustration was explained by Supreme Court in the case of Satyabrata Ghose v. Mugneeram in which Justice Mukherjee held that the basic idea upon which doctrine of frustration is based is that of the impossibility of performance of the contract and the expression frustration and impossibility can also be used as synonyms.
The doctrine of frustration is however applicable only in 2 cases
- If the object of the contract has become impossible to perform
- An event has occurred making the performance of the contract to be impossible beyond the Control of promisor.
A, a resident of India entered into a contract with B, a resident of China for the export of 550 heavy Trucks. Initially, 100 Trucks were delivered, later war was announced between India and China and the government of India suspended all the business transactions with China. Now after this contract has become void.
- A and B contract to marry each other. Before the time fixed for marriage A dies and therefore the said contract between A and B will become void as one party to a contract has died.
The condition necessary for the application of Section 56
- There exist a valid and subsisting contract between the parties:- Existence of a valid contract is the foremost condition for the application of Section 56. The valid contract includes a contract entered in between competent persons and which is followed by some consideration.
- There must be some part of the contract which is yet to be performed:- Section 56 will have applicability only if there is some part of the contract which is yet to be performed and without performing it the ultimate purpose of the contract is not fulfilled.
- The contract after it is entered into becomes impossible of performance:- Another important condition for the application of section 56 is that the contract after it has been entered into has become impossible to perform and cannot be performed and therefore contract stands void.
Generally, frustration of contract can be in the following cases
- Death or incapacity of a party:- Where a party to the contract has died after entering into contract or the party is incapable of performing the contract, in such a situation the contract will be void ( Robinson v Davison).
- Frustration by virtue of legislation:- Where, a law promulgated after the contract is made, makes the performance of the agreement impossible and thereby the agreement becomes void ( Rozan Mian v Tahera Begum).
- Frustration due to change of circumstances:- This particular situation deals with those cases where there was no physical impossibility of performance of the contract, but because of the change in circumstances, the main purpose for which the contract was entered has been defeated.
Initial vs Subsequent Impossibility
Initial impossibility:- The object of making any contract is that the parties to contract would perform their respective promises, and where the contract is impossible to perform the parties would never enter into it. Initial impossibility deals with those cases where the contract was impossible to perform from the very beginning. For example, If a married man knowing that he cannot marry again promises to do so, then he is bound to compensate the other party.
Subsequent impossibility:- It deals with cases where the contract was possible to perform when it was entered but because of some event, the performance has become impossible or unlawful and therefore it discharges the party from performing it. For example, If A purchased Tickets from B for watching a cricket match and he pays 50% as an advance. If the match is cancelled then A can not recover from B as the cancellation of match was beyond the control of A.
Doctrine of frustration is applicable only in cases of Subsequent impossibility and where the contract was impossible to perform from the very beginning, where this doctrine has no application, Moreover this doctrine will also not be applicable in cases where there was a mere delay in performance and contract can still be performed.
Doctrine of frustration as enshrined in Section 56 of the Indian contract act 1872 deals with those cases where the performance of contract has been frustrated and the performance of it has become impossible to perform due to any unavoidable reason or condition. This doctrine is treated as an exception to the general rule which provides for compensation in case of breach of contract. But section 56 only deals with cases of subsequent impossibility as opposed to cases of initial impossibility.