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DOCTRINE OF FRUSTRATION IN INDIAN CONTRACT ACT 1872

Updated: Nov 11, 2020

By

Sandeep Harish B, III year of B.A.,LL.B.


Introduction

The doctrine of frustration deals with the Indian Contract Act of 1872. The term frustration means annoyance when the contract is impossible, no one can fulfil so the contract is void or ab initio. The parties are entering the frustration (impossibility of performance) whether the parties are known or not known, the agreement is void because the contract is impossibility.

Doctrine of frustration

Normally the parties entering into the contract must be the fulfilment of the contract and in case any one of the parties was a breach of the contract and the party was compensated to the affected party is a general rule, but one exception in the Indian Contract Act 1872 is section 56. In section 56 of the Act, it deals with the doctrine of frustration. This doctrine tells about the impossibility of the performance.

Example: A agrees to pay B Rs. 5000 and B promise to bring for A the one star from the sky. The agreement is void because it is impossible.

Section 56 of the Indian Contract Act based on the two maxims these are

1. Lex non cogit ad impossibiliait means “the law could not recognize what is impossible”.

2. Impossibilium nulla obligatio estit means “what is impossible it does not create an obligation”.

Impossibility at the time of the agreement

It has been divided into two types these are

1. Known of the parties

2. Unknown of the parties

Known of the parties

It means the parties are known it is impossible and the agreement between the parties is also void ab initio


Example

1. A agrees to B to produce the big house by mantras. This agreement is void because it is the impossibility of the performance.

2. A agrees to B to produce the 10 kilograms of gold by magic. This agreement is void because it is also the impossibility of the performance; no one has to do this act.

Unknown of the parties

If the parties no one has understood the impossibility, then the contract is void because it is a mutual mistake. If anyone of the party has understood the impossibility of performance the party did not say the impossibility for another party at the time of making the contract, so the contract creates the loss for another party the party must compensate the loss for another party.


Example

1. A sells to B for certain flour bags and the flour bag in a godown but the flour is destroyed in the heavy rain. Unknown of the parties A and B, the flour has been destroyed. So the contract is void because both of the parties did not understand the impossibility, so it is a mutual mistake.


2. A contract from selling the land to B. but A already sells the land to C. So the contract between A and B is forbidden by law. A is liable to pay the compensation for B because A has known the property was already sold. So A has fulfilled the compensation to B.

Impossibility arising after the formation of the contract

When the impossibility arises after the formation of the contract, is known as a supervening impossibility. So the contract is void. The impossibility of performance should not be an excuse for non-performance of the contract. But the impossibility is due to the base on the circumstances beyond the control of the parties. So the party should not perform the contract need not be perform and the party is discharged.

Example

1. A and B have been contracted to marry each other. At the marriage time and date was fixed, but at the time A was the death in the accident one day before the marriage. So the contract is void. Because the A death is based on the circumstances, so it is an impossibility of performance.

2. A contract to a dance performance for B’s daughter's marriage. So B’s has pay’s some advances for a dance performance to A. But at the time A’s leg was fractured during the dance practice. So the A was not the performance in the B’s daughter's marriage. So this incident is based on the circumstances. So the contract is void or an initio.

So these cases are impossible arising after the formation of the contract.

Davis Contractors Ltd., vs. Fareham Urban District Council[i]

The parties entered the contract to build the house for the fixed price, and the house has been completed in 8 months. Due to the labour strike and bad weather conditions, the contractor could not build the building within 8 months. So the person was sued for the breach of the contract on delay and increased material cost. The court held that the hardship should not be a reason for the impossibility of performance, and hence no additional sum could be payable to the contractor.

Conclusion

The doctrine of frustration in the Indian Contract Act 1872 section 56 tells about the impossibility of performance. If the performance is impossible, whether it is known and not known of the parties. So the agreement is void.

[i] [1956] AC 696