The Doctrine of Frustration:
Doctrine of Frustration is covered Under Section 56 of Indian Contract Act 1872, When the contract of performance by the promisor impossible to perform the act then the contract is void. Example S and T agrees that he discover treasure by magic. Here performance to perform agreement being void, and Hence impossible to perform. Just like an agreement is dead man to bring alive is also void. Impossible to perform.
When you are Contract to do any act, then that act after becoming impossible or unlawful, to perform. Hence impossible to perform the act, then it is consider as void.
Non-performance of act done by promisor known to be impossible, or as we say unlawful and but promisee not have any idea or knowledge about the act to be impossible or unlawful, then here promisee can take or sustains Compensation for any loss from promisor.
Initial Impossibility; Act done by an agreement is impossible and treated as void.
Section 56 : the maxim deals with the important maxim" les non cogit ad impossibility" which means a man does not compel the law which he possibly not performed.
Subsequent Impossibility ; Contract to do an act after the Contract is made become impossible some event, which the promisor by reason not prevent, unlawful becomes void, the act becomes impossible.
Let's explain with the help of Examples those are:
Initial impossibility
Example: S contracts to marry P. being already married to R, and being forbidden by the law to which he is subject to practice polygamy. The arrangement by S to marry P is void.
Subsequent Impossibility
Example: J and k contract to marry with each other. Before the time getting fix for the marriage, J goes mad. The contract becomes void.
Supreme court Decision Judgement Case was Satyabrata Ghose vs Mugneeram A.I.R 1954 S.C. 47
Doctrine of frustration is based on the impossibility of performance of the contract.
Frustration and impossibility often used as interchangeable expressions.
Contract of the performance impossible and further parties absolved did not promise to perform on impossibility. Doctrine of frustration is a law part or discharge of contract illegality or impossibility of supervening by reason.
Case In Taylor vs Caldwell, A.I.R (1863) 3 B & S. 826; 129 R.R 573
It was held in this case that the contract never positive and absolute
Contract subject to an express or implied condition particular thing shall continue to exist contract performance deemed to be impossible and both parties to perform the contract are excused.
Eg A let analyse with the help of X and Y, X agreed with Y to give him music hall to use and gardens for four different dates for holding concerts , Y sued X for the breach of the Contract.
Held that the without any fault of X hall become perishing, Hence contract become void. Contract performance was done by X become impossible and Hence, X was not liable for Non performance of contract.
Case
Alluri Naryana Murthy Raja vs District Collector, Vishakhapatnam [1 ]
it was held in this case that the In Maddi Gram Panchayat, of Vishakhapatnam district there Under a contract petitioner granted leasehold rights for lifting the sand in a river. The residents of the village prevented him from carrying on querry operations on the ground that it would lead to depletion of the ground water affecting the irrigation channels. The villagers were undeterred even by registration of criminal case against them and also by grant of injunction by civil court. Uncontroverted Facts was that on account of the events subsequent to entering into the contract, control the parties of contract, contract become impossible, Section 56 of the Contract Act, 1872 therefore, doctrine of frustration was applied to all fours of contract.
Therefore, when the intervention of law is rendered by performance hence it is invalid, subject matter by the parties to continue to exist is destroyed, state of thing assumed and contract not happens and fails, performance is to be rendered and the person disabled or died, and hence Contract discharged.[1]
Self Induced frustration, Doctrine of frustration of contract cannot alleged an event to have frustrated the contract arises from the Act or election of a party.[1]
Case of Boothalinga Agencies vs T.C Poriaswami Nadar A.I.R 1969(1) S.C.R. 65
Supreme court comparing English law and Indian law contained. In Section 56 of
Indian Contract act, legal position with regards of frustration.
Case law in India Contract of doctrine of frustration is really an aspect or discharge of contract of the law or supervening illegally or impossibility of act agreed to be done purview of section 56 of
Indian Contract act.
Rule of positive law and does not leave the matter to be done determined by the intention of the parties.
Case law of English law construction has been determined by court upon the true intention of parties. In Section 56 of
Indian Contract act lay down a positive rule and english authorities cannot assistance Direct. Persuasive value, how English courts decided the cases.
- Specific grounds frustration
- Destruction subject matter
- Change Circumstances
- Non occurrence Contemplated Event
- Death or Incapacity of party
- Government administration or legislative intervention,
- Intervention of war
- Application to leases
Case laws of Destruction of Subject matter e.g Case In Taylor vs Caldwell, A.I.R (1863) 3 B & S. 826; 129 R.R 573 which already discussed.
Case Howell vs Coupland : Held In this Case it was held that the potatoes at the time of Contract. Potatoes had been grown but destroyed by disease. It is clear by authorities would have excused Here it was an agreement to sell, sell specific things neither party is liable if the performance becomes impossible.
Non occurrence of Contemplated Event
The performance of a contract entirely remain possible but owing to event by both parties contemplated the non occurrence, performance of value is destroyed. Case krell vs Henry 1903] 2 KB 740
Death or Incapacity of party
The representative not able to perform such a contract when the death of a party in such case, put to an end. Contract based on personal skill or Confidence of a contract
Case Robinson vs Daviso A.I.R(1861) L.R. Ex 269 Case it was held in this Case that The defendant's wife was an eminent piano player she promised to play piano on a particular day at a concert. Due to illness she was unable to give her performance. It was held that the Contract of performance depended on continued good health of defendants wife and contract was discharged due to her illness. Defendant held not liable to pay Compensation for non- performance
Position of India
In India, impossibility not mean physical impossibility to perform Contract, it includes situations, Where contract performance not literally be impossible because of changed circumstances performance would not fulfil the object which parties in mind.
Case Arti Sukhdev Kashyap ORS V/ s Daya kishore Arora A.I.R.. 1994 NOC 279( Delhi) it was held in this Case was that the performance has been delayed, contract of frustration does not mean. Before the expiry of ten years permission for sale could not be granted, in this Case there was allotment of plot by development Authority. No exceptional circumstances and permission for sale was requested was refused. Then afterwards there was possibility of sale after ten years, contract not frustrated.
Case
Har Prasad Chaubey v. Union of India [2. ] It was held in this that the here the appellant was highest bidder for slack coal belonging to the respondent railways.Full payment made by the appellant for the same. When he applied for the wagons for transporting coal to ferozabad, Coal Commissioner was refused the same on the ground that the coal was meant to be consumed locally only. When the auction of the coal was made no such condition. For the refund of the amount paid by him appellant then filed a suit and also filed a suit against the permission and also contract become frustrated on the grounds of amount of interest and transport Coal was also refused. The claim of Appellant's was accepted and also accepted to refund the money. Decision was that the Coal commissioner refusal to allow the movement of the coal to ferozabad, in spite of fact that at the time of auction that no such condition was there, had frustrated the contract.[1]
No frustration of executed contracts
Section 56 does not cover or apply to executed contracts only, and does not apply to executed contracts.
In the Case of Amir Chand v. Chuni Lal, A.I.R 1990 P&H. 345 ; It was held in this case that the doctrine of frustration does not apply in the estate or interest creating Contract in land. In terms of a decree the tenant of a house was evicted. For the restoration of the the possession, the tenant filled an application. Before the executing Court landlord then pleaded that the Building standing on the land had been demolished by the municipal committee, there was no building, only vacant land, also tenant was also not entitled to the land. So It was held that the contract of lease had not become impossible of performance because the landlord could reconstruct the premises in the same form they existed before demolition and rights of the lessor and the lessee in respect of the new premises would be then available.
Mere likely delay in performance No frustration
As we know that the performance should become unlawful or impossible then the doctrine of frustration is applicable but the event should be such that the object of the parties merely delay in performance not amount to impossibility. Totally upset. Delay in the performance of the contract doctrine doesn't apply. Like in the Case of Satyabrata Ghose v. Mugneeram
it was observed that in this case that the the roads and drains.
were to be made there no time limit fixed. Left entirely to the convenience of the defendant Company and the purchaser also not feel concerned about it. So it was held in this case under such circumstances, requisition of land was only of a temporary character, and the contract was not frustrated.
Commercial difficulty does not mean mere Impossibility
Control of the promisor, event makes the performance more expensive and difficult, then the nature and terms of the contract may decide whether the performance has become impossible, or merely commercially difficult.
Case
Punj Sons Pvt. Ltd. v. Union of India [ 3] It was held in this case that the there was a contract between M.s. Punj Sons Pvt. Ltd. and the Union of
India under which the former agreed to supply to letter 8,420 milk containers of 20 leters each. with the hot dip coating container were coated. Coating was done by tin ignots, also not available in the market.On the release of quota By the director general of supplies and disposals supply of tin ignots could be obtained by the promisors, quota wasn't released, without any fault, they were not able to perform the contract. It was held in this case that the contract in this case had become impossible of being performed and thus void. The promisors were, hence not liable for non- performance of the same.
Merely also the procurement of the goods become difficult due to the strike in the mill, or prices rises, the expected amount of profits will not be able to earn by a person. It is not enough to frustrate the contract. [1]
End-Notes:
- The Indian Contract Act 1872, By BANGIA R.K,
- A.I.R. 2008 A.P 264 [1]
- A.I.R. 1973 S.C. 2380.[2]
- A.I.R 1986 Delhi 158.[3]
Written By Jyoti -
Student at The ICFAI University Dehradun
