Doctrine of Frustration

Introduction

In contract law, parties generally aim to fulfil their contractual obligations, and any breach typically results in liability for the breaching party. However, an exception to this rule is established under Section 6 of the Indian Contract Act, 1872. This section deals with the doctrine of frustration, which relieves a promisor of liability if the contract becomes impossible to perform due to unforeseen events, thereby rendering the contract void.

The doctrine is based on the legal maxim “les non cogit ad impossibilia,” meaning the law does not compel a person to do what is impossible. The Supreme Court in Satyabrata Ghose v. Mugneeram clarified that the doctrine of frustration is rooted in the impossibility of performance, using the terms “frustration” and “impossibility” interchangeably.

When Does the Doctrine of Frustration Apply?

The doctrine of frustration applies in two primary situations:

1. Impossibility of Performance: When the object of the contract becomes impossible to achieve.
2. Events Beyond Control: When an unforeseen event occurs that makes the performance of the contract impossible.

Examples Illustrating the Doctrine

1. Export Contract Example: A resident of India (A) contracts with a resident of China (B) to export 550 trucks. After 100 trucks are delivered, war is declared between India and China, leading the Indian government to suspend all business transactions with China, rendering the contract void.
2. Marriage Contract Example: A and B agree to marry, but A dies before the wedding, making the contract void due to the impossibility of performance.

Key Conditions for Section 56 Application

1. Existence of a Valid Contract: There must be a valid and subsisting contract between the parties.
2. Unperformed Obligations: Some part of the contract must remain unperformed.
3. Subsequent Impossibility: The contract becomes impossible to perform after it has been entered into.

Scenarios Leading to Contract Frustration

1. Death or Incapacity of a Party: If a party to the contract dies or becomes incapable of performing their obligations. The contract is void (e.g., Robinson v. Davison).
2. Legislation: New laws enacted after the contract is made that render the performance of the contract impossible can void the contract (e.g., Rozan Mian v. Tahera Begum).
3. Change of Circumstances: If circumstances change so drastically that the main purpose of the contract is defeated. The contract can be frustrating.

Initial vs. Subsequent Impossibility

Initial Impossibility:
Contracts impossible to perform from the outset are invalid. For instance, a married man promising to marry again, knowing he legally cannot, is bound to compensate the other party for the initial impossibility.

Subsequent Impossibility:
Contracts that become impossible to perform due to unforeseen events after being entered into are discharged. For example, if A buys tickets from B for a cricket match that is later cancelled, A cannot recover the advance payment as the cancellation was beyond B’s control.

The Doctrine of Frustration in India

In India, impossibility does not only mean physical impossibility. It includes situations where changed circumstances make the performance of the contract futile. For instance, in Arti Sukhdev Kashyap ORS v. Dayakishore Arora, it was held that mere delay does not frustrate a contract unless the delay makes performance impossible or defeats the contract’s purpose.

Conclusion

The doctrine of frustration under Section 56 of the Indian Contract Act, of 1872. Offers relief when unforeseen events make contract performance impossible. While contracts aim to ensure obligations are met, this doctrine acknowledges that some circumstances are beyond the control of the parties, justifying the voiding of the contract without liability. Understanding this doctrine is crucial for navigating and managing contractual obligations effectively.

Also Read: Discharge of Contract in Indian Contract

Reference: drishtijudiciary