Thus, in terms of Section 32 of the Contract Act, if the designated event on which the contract is contingent becomes impossible, such contract becomes void. student at Starex University, Also Read – The Test For Frustration In Contract: Emerging Trends For Force Majeure In India, Note - The information contained in this post is for general information purposes only. GENESIS OF FRUSTRATION OF CONTRACT. The  principle was based on the theory "that, in contracts in which the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance"4. The doctrine of frustration has been well done codified in India under section ‘56’in the Contract Act, and this obviates the dependence on different theories to justify the application of the doctrine. Click Here to submit your article.  In the context of this article we are concerned with the second part of the Section 32 of the Contract Act. The doctrine of frustration is an aspect and part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done, and hence comes within the purview of Section 56 of the Indian Contract Act, 1872. We hold, therefore, that the doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of section 56 of the Indian Contract Act. Unlike cancellation of contract, the frustration of contract not determined at the volition of the party. “An agreement to do an act impossible in itself is void.”. The doctrine of supervening impossibility/frustration is cherished in the Indian Contract Act.  While discussing frustration of contract it may also be important to note the difference between Section 326 and Section 56 of the Contract Act. Interested to publish an article at Law Corner? If the event becomes impossible, such contracts become void", 7 Inder Pershad versus Campbell; (1881) 7 Cal. 474. but it is principal is not confined to physical impossibly. It say that any act which was to performed other the contract was made become impossible or unlawful to perform. unlawful becomes void when the act becomes impassible or … As per Section 56 , an agreement to do an impossible act is itself void. Contract to do act afterwards becoming impossible or unlawful: A contract to do an act which, after the contract is made, becomes impossible or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. What would not constitute ground of impossibility: Various decisions which have identified certain situations as not constituting grounds of impossibility – Events which make the performance of the contract impossible subsequent to the formation of the contract known as a supervening or subsequent impossibility.  The consequence of a contract getting frustrated is that the contract becomes ‘void’. Held: The court dismissed the defendant’s suit stating that the ‘’impossibility’’ under Section 56( Agreement to do impossible act) doesn’t mean in the physical or literal context. Doctrine of Supervening Impossibility. Another important aspect to check for the application of impossibility is that the foundation of the contract gets upset. (1954) S. C. 44 and Alopi Prasad vs Union of India A.R. Alternatively, it may supervene. Section 56 states that an agreement to do an act which becomes impossible or unlawful is void. It is applied when parties did not have an intention regarding the supervening event and when there is no implied term in the contract. factors and circumstances that the court consider while determining the applicability or non-applicability of section 56 has been dealt with in detail in this paper. Section 56 of the Indian Contract Act, 1872 stipulates: "Agreement to do impossible act: An agreement to do an act impossible in itself is void. The first paragraph of section 56 represents the same law as in England. the parties to a contract had impliedly agreed that in the event the performance of contract becomes impossible or illegal, the parties shall be discharged from the contract. It enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done. Agreement to do impossible act.—An agreement to do an act impossible in itself is void. The doctrine of frustration of contract is an aspect or part of the law of discharge of contract by reason of a supervening impossibility or illegality of the act agreed to be done. Happening of event which rendered the contract impossible to performance but would not include hard and difficult case of abnormal rise or fair. The second paragraph has the effect of turning into general rule, the limited exceptions under the English Law. Mukherjee J. further state while referring to the second paragraph to section 56. It extends also to case where the performance of the contract is physically possible but the observed the parties had in mind has failed to maintains. The first part of Section 56 lays down the law in the same way as in England, whereas the second part enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done. However, it cannot be entirely ruled out that the doctrine of frustration, as recognised in English law, does not come within the parameters of Section 56 of the Contract Act.  The concept of frustration of contract dates centuries back to the ‘Doctrine of Frustration’ and has, thereafter, evolved in the English Laws. Impossibility existing at the time of contract. Section 56 of the Indian Contract Act 1872 deals with different situations when it becomes impossible to perform the contract impossibility maybe at the time of making of contract for agreement or maybe supervening impossibility or illegality, Section 56 of the act provides This is called “Doctrine or Supervening Impossibility”. Section 56 of the Act is applicable when it becomes impossible to perform due to some supervening circumstances or events. There must be a valid and subsisting contract between the parties; There must be some part of the contract yet to be performed; That part of the contract, which is yet to be performed, should become impossible or unlawful; and. Section 56 of the Indian Contract Act lays down: “An agreement to do an impossible act is void”. The law governing the contracts is embodied in the Indian Contract Act, 1862 ("Contract Act"). Section 56 of Indian Contract Act,1875 enriched Supervening impossibility as the concept which applies same as Doctrine of Frustration Doctrine of frustration is an exception to the general rule of breach of contract where it provides compensation Notes: Taylor v Caldwell,1863- [1863] EWHC QB J1, (1863) 3 B & S 826, 122 ER 309 ‘Impossibility’ referred therein includes practical impossibility which goes to the root of contract or affects the object or purpose of the contract, i.e. impossibility of act. This is known as “doctrine of frustration” under the English law and is known as “doctrine of supervening impossibility”. Resulting in the obligation under the contract being radically different from those contemplated by the really an aspect or part the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the preview of section 56, Case law:- Satyabrata Ghosh v/s Mugneeram AIR (1954) S.C 44 (supreme court observed in regard this case was based on Templin steamship co. ltd v/s Anglo Mexican Petroleum product co. ltd). Contract to do act afterwards becoming impossible or unlawful: A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or …  The term ‘frustration’ has been defined in the Black’s Law Dictionary3 as “The prevention or hindering of the attainment of a goal, such as contractual performance” and in relation to ‘contracts’ the terms has been described as "The doctrine that if a party’s principal purpose is substianlly frustrated by unanticipated changed circumstances, that party’s duties are discharged and the contract is considered terminated". It was held by the court that Section 56 applies in the present dispute and further observed that the contract can get frustrated by the illegality of the act agreed to be done or by the reason of supervening impossibility. 8 The Law of Contract by P C Markanda 2nd Edition 2008; Pg No 893 There exist three basic conditions that are needed to satisfy the doctrine under section56 there must be a subsisting contract some part of the contract is still to be performed and performance has become impossible after the contract is entered into. factors and circumstances that the court consider while determining the applicability or non-applicability of section 56 has been dealt with in detail in this paper. Physical impossibility is not a prerequisite as already discussed. Notwithstanding the subjectivity, the test for frustration is an objective test, because it is well settled that the supervening frustrating event immediately puts an end to an agreement, independently of the volition of the parties, without either party being conscious of the fact that what has happened has snapped their contractual bonds. SC in Satyabatra’s case (supra) has observed, "In that we have to go by is that of supervening impossibility or illegality as laid down in Section 56 of the Contract Act, taking the word 'impossible' in its practical and not literal sense.  A party, however, taking justification under doctrine of frustration on the ground of the performance becoming impossible due to certain overturning events, in view of the aforesaid caveats in the Section 56 of the Contract Act, must reasonably show, in all bonafide, that the supervening impossibility is such that its performance has become impossible. In this case, the defendant company promised to sell the plaintiff a plot of land after developing by its constructing the roads and drains. Section 56 [2] is dealt with when matter is not determined to the intention of parties. Under Section 56, the court can proceed to grant relief on the ground of subsequent impossibility when the very foundation of the contract becomes upset by the happening of an unforeseen event which was not anticipated by the parties at … However, the term ‘frustration of contract’, explicitly, is not found in the Contract Act. The performance of obligation under a may be hindered by unexpected supervening events leading to contractual uncertainties. Section 65 postulates that when an agreement is discovered to be void, such as in case of a contract getting frustrated, the person who has received any advantage under such agreement is ‘bound’ to restore it or to make compensation for it, from whom he received it. as it was a case of lease of property in dispute which was situated in Gujranwala went into side of Pakistan hence making the term of the agreement impossible. The doctrine of frustration incorporated under section 56 of the Indian contract act provides a way out to the party when the performances has becomes impossible owing to any supervening events without their fault. The parties to such a contract are discharged. CTRL + SPACE for auto-complete. The tension can be resolved by referring to section 56 of the Indian Contract Act 2 where the definition of impossibility is found through the case of Satyabrata Ghose v Mugneeram Bangur & Co AIR 1954 3. Indeed, since the very aspect of a contract getting frustrated may not be anticipated by the parties whilst executing the contract. a) These is void contract between parties, b) Some part of contract is yet to be performed, d) That impossibility cannot prevent by any party.  Section 56 of the Contract Act, however, may not be applicable in situation of (i) self‐induced frustration, and (ii) where in a contract, parties have, expressly stipulated that the contract would stand despite such intervening circumstance. Such defences are generally perceived as sham or a tactic by one party to excuse the performance of a contract. Prof. Law…, An Interview with Dr. Ankit Awasthi [Asst. However, some portion of the area comprised in the scheme was requisitioned for military purposes. It was observed that the impossibility contemplated by section of the contract is not confined to something which is not humanely possible. In simple words, on the happening of an event which makes the contract impossible or unlawful, the contract stands determined and discharged. The doctrine of frustration has been envisaged in Chapter IV in Section 562 of the Contract Act.  Section 56 of the Contract Act, however, provides for compensation to be payable for loss of non‐performance if the same was known to such party. The BlackLaw Dictionary defines frustration in relation to contracts as the doctrine that if a party principal purpose is substantially frustrated by unanticipated changed circumstances that party duties are discharged and the contract is considered terminated also termed as the frustration of purpose.  Section 32 postulates two things (i) the contingent contract is enforceable only on the happening of an uncertain event; and (ii) if the event, on which the contract is contingent which parties have contemplated at the time of entering the contract, becomes impossible, the contract becomes void. The company attempted to rescind the contract on the ground of supervening impossibility. Also in Susila Devi v/s Hari Singh. non performance. In satyabrata v/s mugneeram ( AIR  1954 S.C 44 ). This section states as follow: An agreement to do an act impossible in itself is void. Read PDF Article 61 Supervening Impossibility Of Performance performance of the contract and thereby contract is discharged, (Section 56, Indian Contract Act, 1872). Job Post: Assistant Manager [Legal] @ RHFL, Chennai: Apply Now. 56.  The doctrine of frustration was initially, in English laws, based on the notion of ‘implied contract’ i.e. The doctrine of frustration is a doctrine of special case of the discharge of contract by an impossibility to perform it. Execution of these obligations may be affected by unforeseen or supervening events which are unexpected or incapable of being known in advance by either of the parties and which ultimately discharge the parties from their contractual obligations. While deciding whether or not the contract has been frustrated, the courts objectively look to the construction of the contract, the effect of the changed circumstances on the parties’ contractual obligations, the intentions of the parties and the demands of justice. It is of two types; 1. It is covered by Section 56 of … 9 When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore, it, or to make compensation for it, to the person from whom he received it. Sec 56 of the Indian Contract Act, 1956, enumerates on the “Doctrine of Frustration” of a contract. Impossibility of Performance in Traditional Contracts: By Frustration/ Agreement to do impossible Act: Section 56 contemplates various circumstances under which agreement may be void, since it is impossible to carry it out. But section 56 only deals with case of subsequent impossibility as opposed to case of initial impossibility. "The doctrine of frustration comes into play when a contract becomes impossible of performance, after it was made, on account of circumstances beyond the control of parties"‐ Mr (Retd) Justice B K Mukherjea1. The SC in Satyabrata Ghose’s case (supra) has held that the "doctrine of frustration of contract is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract, Act". Dispute Resolution - Commercial Litigation, Dispute Resolution - International Arbitration.  A contract when entered and was capable of being performed, however, thereafter becomes impossible of performance for reasons of some event which a party could not prevent or the act for which the contract was entered itself become unlawful, then such contract itself becomes void or rather to say the contract becomes ‘frustrated’. – The doctrine of frustration of contract is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract Act. LL.B (Hons.) An agreement to do an act impossible in itself is void (S.56) Impossibility of performance of an act does not give or creat any obligation upon the parties to a contract. The courts, both in India and England, have held that the word ‘impossibility’ used in Section 56 of the Contract Act must be interpreted in a practical form and not in its literal sense. 421, In satyabrata v/s mugneeram ( AIR  1954 S.C 44 ) the supreme court have observed that various theories have been propounded regarding the juridical basis of the doctrine of frustration yet the essential idea upon which the doctrine is based on that of the impossibility of performance and frustration are often interchangeable expression also meaning of the term impossible was explained under section 56. What is Restraining Order And How to Get A Restraining Order in India? Subscribe to our newsletter and get all updates to your email inbox! Bar Council of India Shall pay Rs. © Conventus Law 2020 All Rights Reserved. If the performance becomes impossible because of a supervening event, the porimsor is excused from the performance of the contract. Such impossibility usually arises due to facts that the promisor had no reason to anticipate and did not contribute to the occurrence of. Prof. of Law…, An Interview with Prerna Deep [Pursuing LLM from University of Edinburgh,…, An Interview with Dr. Daksha Sharma (Assistant Professor of Law at…, Law Corner Campus Ambassador Program 2020, Online Internship Opportunity [Content Writing] @ Law Corner – Apply by…, Why Did I Choose to Study Law: Asadulla Al Galib, The Test For Frustration In Contract: Emerging Trends For Force Majeure In India, Job Post – Legal Manager @ SOBHA Limited: Apply Now. Supervening impossibility or illegality involving action contrary to law or public policy. The determination of the degree of change in the obligation must be done by looking into the construction of the contract in the light of facts existing at the time of its formation. Section 56, of the contract act, deals with the impossibility of performance. This principal has been upheld in Satyabrata Ghose’s case (supra), Inder Pershad versus Campbell7 and other judgement of English Courts. However, under Indian law, the statutory provision under Section 56 sets out a positive rule of law on supervening impossibility or illegality that renders performance impossible in its practical, and not literal sense. ", 4  Taylor v. Caldwell ([1863] EWHC QB J1), 5  Satyabrata Ghose versus Mugneeram Bangur & Co & Anr;(AIR 1954 SC 44), 6  "Contingent contracts to do or not to do anything in an uncertain future event happens, cannot be enforced by law unless and until that event has happened. 5000/- Stipend to New... What is Article 370? 1 Mr (Retd) Justice B K Mukherjea; Satyabrata Ghose versus Mugneeram Bangur& Co & Anr (AIR 1954 SC 44) 2 "An agreement to do an act impossible in itself is void. Impossibility may be in law or in fact The doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of section 56; Satyabrata Ghose v. Mugneeram Bangur, AIR 1954 SC 44. If you found any in this website, please report us at info@lawcorner.in. A radical change in the fundamental assumption, on the basis of which contract was entered into, is required to make the performance impracticable, illegal or impossible without the default of either of the parties. The performance of an act may be impracticable and useless from the point of view of the object and weather it form’s the biases of the contract rightfully has to be decided by the court. The concept of frustration of contract is principally based on impossibility of performance of the contract. An illustration of inherent impossibility of provided therein as A agrees with B to discover treasure by magic. However, this arises at the time when the promisor's performance is due. The SC in Satyabrata Ghose’s case (supra) has held that the "doctrine of frustration of contract is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract, Act". Click to share on Facebook (Opens in new window), Click to share on WhatsApp (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on Pinterest (Opens in new window), An Interview with Dr. Aneesh V Pillai [Asst. The contract has therefore not been discharged by supervening impossibility. The Indian Contract Act, 1872 in the contract act does not define the term frustration.  In India, since Section 56 of the Contract Act, itself, embodies the doctrine of frustration, the controversy is fairly narrow. The supreme court made it clear that unlike English la the word impossible has not been used in the sense of physical or literal impossibility. That the impossibility should be by reasons of some event which the promisor could not prevent. When frustration occurs, it avoids the contract itself and discharges both parties automatically8. Section 56 covers only ‘supervening impossibility and not implied terms’. The aspect of discharge of contract has to, therefore, be analysed within the contours of Section 56 of the Contract Act. If a promisor knew or could, with reasonable diligence, have known that the act which he had promised to perform was impossible or unlawful, but the same was not known to the promise, in such a scenario the promisor is liable to make compensation for the loss which the promise may suffer in view of the non‐performance by the promisor. The second paragraph has been in fertile source of litigation as the court has deliberated much on the interpretation of the word impossible. Whereas, under Section 56, the parties have not, while entering the contract, considered any such event due to which the contract may become void. Supervening impossibility is the impossibility arising after the formation of a contract. When risk is inherent to contract frustration is self indicted the contract is an executed contract the contract can still be performed or the foundation of the contract is not substantially destroyed are example of factors that would  not attract provision of section 56. This view was upheld by Supreme Court in Satyabrata Ghose vs Mugneeram Bangur A.I.R. It lays down a positive rule relating to the frustration of contract and does not leave the matter to be determined according to the intention of the parties or the choice of theory to be applied by the court. This doctrine is treated as an expectation to the general rule which provides for compensation in case of breach of contract.  The doctrine of frustration qua the Section 56 of the Contract Act has been discussed extensively in the judgement of Supreme Court of India("SC") in the case of Satyabrata Ghose versus Mugneeram Bangur & Co & Anr5 and the same has been since followed in India. Of Satyabrataghose v/s MugneeramBangur and Co of some event which rendered the contract impossible subsequent the... Another important aspect to check for the application of impossibility is that the promisor had no reason to anticipate did! 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Leading to contractual uncertainties such impossibility usually arises due to some supervening circumstances events. Authored by Navneet Bhardwaj, B.A are enforceable or otherwise recognizable at law: “ an agreement to treasure! As to what is Restraining Order and How to get a Restraining Order and How to get Restraining...