7.

PERFORMANCE OF CONTR ACT

When the rights and

said to be obligations arising out of a contract
discharged or terminated. A contract are
extinguished, the contract
may be discharged in the following ways
 (1) By Performance of the contract (Ss. 37-67)
(2) By Breach of the contract (including anticipatory breach- Sec. 39)
3) By Impossibility of performance (doctrine of frustration- Sec. 56)
(4) By Agreement and Novation (Ss. 62-67).

(5) By Operation of law.

Performance of Contract
CU
Every contract consists of reciprocal and actionable promises. According to Sec. 37,
parties to the contract have a duty to perform, or offer to perform their respective
promises, unless the performance is dispensed with or excused under the provisions
to B
of the Contract Act, or of any other law" Thus if A promises to deliver goods
on a certain day on payment of Rs.1,000
but A died, then A's representatives are
bound to fulfil the contract made by A. However, where the contract depends
on

personal skill, such as painting a picture, on the death of the promisor representatives
the

are not bound by the obligation. Likewise,

where the contract becomes impossible to
and need not be performed.
perform under Sec. 56, the contract becomes void
Offer or Tender of Performance
under the contract to the promisee.
The promisor must offer to perform his obligation
then for the promisee to accept the
The offer is called "tender of performance." It is
is not responsible for non-performmance,
performance. If he does not accept, the promisor
nor does he thereby lose his rights
under the contract (Sec. 38). The promisor, then,
can sue the promisee for
breach of the contract.
offer of performance must fulfil the
Sec. 38 further lays down that every such
following conditions:
tender becomes conditional when
(i) The tender must be unconditional. A
terms of contract. Payment by cheque
it is not in accordance with the
it is only a conditional
is deemed to be subject to encashment and, thus,
tender.
time and place, and under such
(ii) The tender must be made at proper
circumstances that the promisee may
have a reasonable opportunity of
able and willing there and then to do
ascertaining that the promisor is
his promise to do.
the whole of what he is bound by
has the same legal consequences
(i) An offer to one of several joint promisees
as an offer to all of
them.

By Whom Contract should be Performed

is one personal contidence,
which is based on
According to Sec. 40, if the contract
or
skill like painting, dancing, singing, marrying,
involves the exercise of personal
writing a book, etc., it must be performed by the promisor himself and nobody else.
not involve personal skill, the promisor or his
If, on the other hand, the contract does
to perform the same.
representatives may employ a competent person
According 41, when the promisee accepts performance of the promise
to Sec.
Thus if A
from a third person, he cannot afterwards enforce it against the promisor.
owes B a sum of Rs. 5,000; C, who is A's friend pays to B Rs. 5,000. The payment

by C to B.discharges A from the debt.

 Promises
Performance of Joint
Sections 42-45 deal with the question of liability of the joint promisors T
rules are contained in these sections fol owing
The liability ofthe joint promisors isjoint and several. When a ioint .
is made, and there is no express agreement to the contrary, the e
compel any one ormore joint promisors to perform the whole
may promise
promise (Sec. 43). For example, A, B and Cjointly promise to pay i the
3000. D may compel either A or B or C to pay him Rs. D, Rs
3000.
Contracts involving personal skill (e.g. to paint a
end on the death of any of the joint promisors.
picture) come toan
Successive action against different joint promisors I f the
promisee brings an actinnon
against one or some of the joint promisors only, and leaves others, a
against those some promisors does not bar an action against others, if the judeement
has not being recovered from them. Under full amount
English law, such an action is barred.
i) According to Sec. 42, "joint promisors" must,
fulfil the promise. And if any une of them during their joint lives
dies, his representatives
jointly with the surviving promisors, fulfill the must,
promise.
(ii) There can be contribution between
is made to pay more than joint promisors i.e. one joint promisor
his share, he can recover
other joint contribution from the
promisors, according to their shares. If any one
makes a default in
making joint promisor
must bear the loss
contribution, the remaining joint promisors
arising from such default in equal shares
3, Sec. 43). (Paras 2 and
(iv) The creditor is also
from his
given the right to release anyone of the
liability (Sec. 44). joint promisors
(v) According to Sec. 45, when a promise is made
then, unless a contrary intention to several
persons jointly,
claim appears from the contract, the
performance rests with all the right to
promisee cannot demand promisees jointly and a single
performance.
promissory note in favour of C and CThus if A and B execute a
alone, D must join him. D; will not succeed if he
Under the sues
of terms of Sec. 45, a
several joint promisees does not payment one
to
a debt.
Thus if A borrows operate as a complete
debt becomes due A Rs. 3,000 from dischargeor
B, C and D, and when the
by the payment. tenders it to B who
accepts it, A is not discharged
Time and Place
for Performance
According to Sec. 46, even
the contract is not though
no time for
to be made
rendered
within a
void for
uncertainty. performance fixed by the paruc»
The
is
be "reasonable'
time. performance, in such a case,
performed on certain day, the According to Sec. 47, when the
a
nas

contract during the usual business promisor's duty in such

hours case is to
promise 18
a
non-fulfilment the promise. It may be
of on such
day, otherwise it perform tnc
is fixed in the would amoun
promise, the pertormance noted that where the
place for
According to Sec. 50, the
must be
offered perfomane
performance of any promisethatmayplace.
at

be made in any
manner, or at any time which the promisee prescribes or sanctions, Where A owes B
Rs.2,000 and B accepts some of A's goods in reduction of the debt, the delivery of
the goods operates as a part payment.

Ordinarily it is expected that either party will perform his obligation at the
stipulated time (if mentioned in the contract). If the intention of the parties was that
time should be of the essence of the contract, then a failure to perform at the agreed
time renders the contract voidable at the option of the opposite party (Sec. 55). Time
is generally considered to be of the essence of the contract: (1) where the parties have
expressly agreed to treat it as of the essence, (2) where delay operates as an injury.

(3) where the nature and necessity of the contract requires it to be so construed, for
example, where a party asks for extension of time for performance.
In "commercial contracts" times is ordinarily of the essence of the contract
(Wasoo Enterprises v JJ O1 Mills AIR 1968 Guj. 57); similarly when the prices of
the goods like shares bullion are subject to rapid fluctuation. In case of sale of
or
the
immovable property, the time is generally not the essence of the contract. When
such a contract
time is not the essence of the contract, the delay in the performance of
does not make the contract voidable, but the remedy available to the aggrieved party
is to claim compensation for any loss caused by delay. Even where time
in such a case
is of the essence, the injured party may at his option accept the delayed performance.

Performance of Reciprocal Promises

or the part of consideration
Sec. 2(f) says: Promises which form the consideration
"

when a contract consists of an

for each other are called reciprocal promises". Thus
or mutual promises. "When
such
exchange of promises, they are called reciprocal
the promisor is not bound to perform
promises have to be performed simultaneously,
to perform his promise" (Sec. 51- mutual
unless the promisee is ready and willing
and concurrent promises).
must be performed may be fixed by the
The order in which reciprocal promises
to be performed in the
not expressly fixed, they will have
contract, but where it is
transaction admits (Sec. 52- mutual and independent
order in which the nature of the
build a house for B at a fixed
Thus when A and B contract that A shall
promises).
house must be performed before B's promise to pay
price, A's promise to build the course of business, work is not usually paid
for it. It may be noted that in the ordinary
for before it is done.
down the principle that where one of the parties to reciprocal
Sec. 53 lays
the contract becomes voidable
promises prevents the other from performing his promise,
prevented; and he is entitled for compensation from the
at the of the party
option so

loss occasioned.
other party for any so

Sec. 54 laysdown that where the nature of the reciprocal promises is such that
one cannot be performed or
its performance cannot be claimed unless the other party
then if the latter fails to perform, he cannot
performs his promise in the first place,
but must make compensation to him for his loss
claim performance from the other,
For instance, A hires B's ship to take in and
(mutual and dependent promises).
Mauritius, a cargo to be provided by A, B receiving a certain
convey, from Calcutta to
does not provide any cargo for the ship. A cannot elaim
freight for its conveyance. A
B sustains
the performance of B's promise, and must compensate B for the loss which
by the non-performance of the contract
 Legal and llegal
Promise to do Things
Reciprocal
is a void second
the second is aa
contract, but the
agreement
vois

In such cases, the first set of promises Rs 1eemen

that A shall sell Ba house
Rs. se for
For instance, A
and B agree 10,000, but
30,000 for it. The f
bu
(Sec. 57). house he shall pay Rs. 0,000 firs set of
that if B it as a gambling
uses noted that when the legal
valid but the second
void. It may be legal and i
llegal
ar

promises is is void (See Sec. 24)

whole of the agreement
parts are inseparable, the

Aternative Promises, One branch being llegal

one branch of which is legal and the
In the case of an alternative promise, other
branch alone can be enforced (Sec. 58). When A and B agreed that
illegal, the legal to A either rice or smuoolad
A shall pay B Rs.1,000,
for which B afterwards deliver
contract to deliver rice only.
opium, this is a valid

Appropriation of Payments
When a debtor, owing several distinct debts to one person, makes a payment, which
is not sufficient to discharge all the debts, the question arises to which particular debt
the payment is to be applied. Sections 59 to 61 lays down the following three principles:

i) Appropriation by debtor- Sec. 59 confers the right of appropriation

upon the debtor i.e. the debtor has the right to request the creditor to
apply the payment to the discharge of some particular debt. If the creditor
accepts the payment, he is bound by the appropriation. If the creditor
does not want to do that, he must not accept the payment.
(ii) Appropriation by creditor- Sec. 60 enables the creditor to make
appropriation. If the debtor makes payment without any appropriation,
the creditor may use the payment at his discretion to wipe out any debt
due (even it may be time-barred); he cannot
whichis lawfully though
make the appropriation to an illegal or void debt.
(ii) Appropriation by law- Sec. 61 applies when neither party makes an
appropriation. In such a situation the law gets the right to appropriate
the payment and the law prefers to wipe out the debts in the order or
time in which they were incured.

[2] Breach of Contract

When party having a duty to perform a contract fails
a
to do does an a
that, or
whereby the
performance of the contract by him becomes
perform the contract, there is said to be a breach of contractimpossible,
or he refuse
ach
on his part. On the
of contract by one party, the other brea
party is discharged from his obligation to
his part of the obligation, and also
gets a right to sue the guilty
per
party for damag
The breach of contract
may be either (i) actual or
present i.e.
ance

of the contract on the due date of

date of performance, or (ii)
anticipatory i.e. befo
non-periodue
due

performance
has come. For
example, A is to supply certain 1st
Ist
January. On 1st January, A does not
supply the goods to of
contract. On the other hand, if A informs B on goods. He has made actual brea
1st December that he will not
the contract on 1st Jan. next, A has
made per
anticipatory breach of contract.
 Anticipatory Breach of Contract

An anticipatory repudiation occurs when, prior to the promised date of

dhe promisor absolutely repudiates the contract (expressly or performance
down that "anticipatory breach of contract could be made impliedly)."
Sec. 39 lays
by promisor,
refusing to perform the contract, or disabling himself from performing
either
the contract by
in
is entirety"

lustration (a) to Sec. 39 reads:

A, a singer enters into a contract with B, the
manager of a theatre to sing at his theatre two nights in every week during the next
two months, and B engages to pay her Rs.100 for each night's performance. On the
sixth night, A wilfully absents himself from the theatre. B is at liberty to put an end
to the contract.

When one person makes anticipatory breach of contract, the other party has two
altermatives open to him, viz. (1) He may rescind the contract immediately and may
bring an action for the breach of contract without waiting for the appointed date of the
performance of contract (i) He may not put an end to the contract but treat it as still
subsisting and alive and wait for the performance of the contract on the appointed date.
In Hochster v De La Tour (1853) 2 E&B 678, A engaged B on 12th April, 1852
as a courier for accompanying him on a tour of Europe, which was to begin on 1st
June. B was to be paid £10 per month for his services. On 11th May, 1852 A
informed B that B's services were not needed. On 22nd May, 1852, B sued A for the
breach of contract. Held that even though B had brought an action on 22nd May (i.e.
before the due date of performance of the contract), he had a right to do s
If a man promises to marry a woman on a future day, and before that day
marries another woman, he is instantly liable to an action for breach of promise of
marriage. The principle applies to contingent contracts. Where a person promises to
marry a woman on the death of his father, and during the life time of his father
married another, he was held liable [Frast v Knight (1872) LR 7 Exch 111].
When the contract is kept alive by the promisee (aggrieved party), the promisor
may perform the same inspite of the fact that he had earlier repudiated it. However,
if the promisor still fails, the promisee will be entitled for the compensation. In case
the promisee has elected to keep the contract alive and subsisting it is just possible
that before the due date of performance some event happens (viz.
supervening
impossibility or frustration) because of which the promisor gets excused from the
pertormance of the contract. The promisor will be benef+ted in such a situation as he
will be discharged from the performance of the contract.

Minor Breach Not a Repudiation of Contract

Every minor irregularity in the performance of the contract cannot be seized upon as
a
repudiation so as to put a premature end to the contract. "If there has been a
substantial though not exact and literal pertformance by the promisor, the
cannot treat
promisee
himself as discharged.' The court has to take into account the effect of
the breach upon the contract as a whole. Where out of the several deliveries
by
instalments, one delivery was below the standard, it could not be treated as a breach
of the contract.

Where A agreed to purchase from B under two contracts 30 tons of

sugar to
be delivered at different dates, A having failed to
contract, B claimed to rescind both contracts, it
take the
on the part of A to
was held
perform his promise in its entirety that as :
delivery under
B was not entitled to rescind the within ere thene fi
was no
contract. the
meaning of Secreleiwsa
3] Impossibility of Performance ec.39,
Discussed later ('Frustration of
Contracts').
[4] Discharge by Agreement and
Sections 62 and 63 deal with the Novation
it may end contracts in which the
by the 'mutual consent' of the
parties. obligation of the
paries to
Contracts which Need Not be
Sec. 62 deals with the Performed
effect of novation,
parties to a contract agree to substitute a rescission and alteration eration of contract
it, or to contract. If the
it, the original contract new contract
need not be for "

performed". rescind ort

When the parties to a alter
contract agree to
contract, that is called novation. substitute the
the original In such a case the existing contract for a neu
agreement is
altered agreement. When the
liability
extinguished and in its place they become of the
parties as regarde
novation is bound ards
must be
subsisting and by a
"change of by the
after there has been a unbroken. The substitution of a contract', the original
new

new
breach of the
original
new
contract is not contract
agreement should be valid and agreement. It is further possible
Thus, A owes B Rs. enforceable. necessary that the
mortgage of his (A's) estate 10,000.
for
A enters into an
agreement with B, and gives a
contract and Rs.5,000 in place of debt
Rs.1,000, andextinguishes the of
A owes B Rs.10,000. This is a new
old. But, where
B orders A to
to the credit C Rs.1,000, and
agreement, no new contract haswith Rs.1,000 in his books but C does Bnotowes C
been entered into assent
Alteration' of a contract and B still owes C
of a contract.
The parties to means
change in one or more of the Rs.1,000.
the material tems
a
change of parties also; when contract remain the same. In
terms of the
contract must be
the parties are
not novation, there may be
altered changed then to be a novation tne
A
contract may be substantially.
longer bind them. Such an discharged by agreement
contract and no new agreement amounts to between the parties that it shall no
contract is "rescission'
substituted in its
or
cancellation or
Remission of Performance place.
According
contract
to Sec. 63, the party
who has the
may G) remit or right to demand the
TOr
perlomance, dispense with it, wholly performance the

cannot force the

or
(ii) accept any or in
part, or (11) ex
parties other satisfaction
legal action for breachinstead of
to take
to excuse

being performance' is
an valid, while an of performanceent
contract. 'An agree
agreement in restraint of legal 'agreement not to sue for void
) proceedings. brea
Dispensing with
remitting
or
dispense with
performance of performance
or
The
the contract promise
without any ration. To
co
 dispense with" means that the party entitled to claim performance may
waive it i.e. abandon his right. The acceptance of less sum of money
where more is due is a good discharge of the whole of the liability.
i) Extending the fime of performance - Sec. 63 permits the promisee to
grant extension of time for the performance of the contract, and no
consideration is needed for the same. The extension of time must be by
mutual understanding between the parties.
(ii) Accord and satisfaction Sec. 63 permits the promisee to accept any
other satisfaction in lieu of agreed performance, and this would discharge
the promisor. For example, A owes B, under a contract, a sum of money,
the amount of which has not been ascertained. A without ascertaining
the amount gives to B, and B, in satisfaction thereof, accepts the sum
of Rs.2,000. This is a discharge of the whole debt, whatever may be its
amount. Likewise, P who claims Rs.50,000 fYromQ, may accept a house
of Qin satisfaction of the debt. Accepting some other satisfaction instead
of actual performance is known as principle of "Accord (agreement) and
Satisfaction" under English law.

Assignment of Contract
transfer of contractual rights or liabilities by a party to the
Assignment" means
contract to some other person who is not a party. The liability under a contract cannot
be assigned without the consent of the promisee, however the rights and benefits may
be assigned and the assignee can demand performance from the other party to the
contract. The assignment thus made will, however, be subject to the activities, if any,
between the original contracting parties. The rights under a lottery ticket are assignable.

I5] Discharge by Operation of Law

A contract terminates by operation of law in the following cases:

Limitation Act down that in case of breach of

lays
(a) Lapse of time- The
a contract, legal action should be taken within a specified period, called
the period of limitation, otherwise the promisee is debarred from
suit and the contract stands discharged. Under the Limitation
instituting a
Act, the limitation period for simple contracts is three years.
b) Insovency- A contraut is discharged by insolvency of one of the parties
to it when an Insolvency Court passes an order in this regard.
(c) Merger- When an inferior right contract merges into a superior right
contract, the former stands discharged automatically. For example, when
a man holding property under a contract of tenancy buys the property,
his rights as a tenant are merged into the rights of ownership.
(d) Unauthorised material alteration- A material alteration made in a written
document/ contract by one party without the consent of the other, will
make the whole contract void.
 DISSOLUTION
OF
CONTRACTUAL
OBLlGATIONS:
& FRUSTRATION OF cONTRACT that there has been a failure of what in the contemplation of both parties would be he
essential condition or purpose of the performance.
The doctrine of supervening impossibility comes into play in two types of
the situations:
of the contract becomes impossible, purpose, which
ich the
When the performance becomes impossihi i) Where the performance becomes physically impossible because of
is frustrated. If the performance
Darties have in mind, ofs Decause
is excused from the performance disappearance of the subject matter (See below).
of a supervening event, the promisor ontract.
This is known as doctrine offrustration under English law, and is covered
ed Iby Section (ii) Where the object the parties had in mind failed to materialize. The
S6 of the Indian Contract
Act. performance of an act may not be literally (or physically) or legally
act- An to do an act impossiblebut it may be impracticable and useless from the point of
Sec. 56. Agreement to do impossible agreenment impossihile in view of the object and purpose which the parties had in view. Thus in
itself is void (Initial impossibility).
Krell v Hemry (1903) 2 KB 740, where a flat was hired only for viewing
Contract todo act afierwards becoming impossible or unlawful- A contract to a coronation procession but the procession having been cancelled
which, after the contract is made, becomes
do due to
an act
impossible, or, byreason of some king's illness, it was held that object of the contract was frustrated by
event which the promisor could not prevent, unlawful, becomes
void when the act
non-happening of the coronation.
becomes impossible or unlawful (Supervening
impossibility). The effect of frustration is that the dissolution of the contract occurs automatically;
Compensation for loss through non-performance of act known to be it does not depend on the choice or election of either party (as in the
case of novation
unlawful- Where one person has promised to do something which he impossible or rescission of contract) or on their intention or the opinion or even knowledge
as
reasonable diligence, might have
known, and which the promisee did not
knew, or, with or
that frustration should not
to the event. A very important principle follows from this,
impossible or unlawful, such promisor must make know, to be When a contract becomes
be due to the act ofa party to the contract i.e. self-induced.
promisee sustains through thecompensation
any loss which such to such promisee for benefits must restore
frustrated (i.e. becomes void), the party who has received the
lustrations
non-performance
of the promise them to the other (Sec. 65). Thus, where a singer has recieved
an advance for singing
at a function, and he could not perform his obligation
because of his illness, he must
(a) A agrees with B to discover treasure of refund the advance [l. (d), Sec. 65].
(6) A and B contract to magic. The agreement is void.
marry each other. Before the
mamiage, A goes mad. The contract time fixed for the
Specific Grounds of Frustration
() A contracts to becomes void.
have become well established:
marry B, being The following grounds of frustration
by the law to which he is already married to C, and being forbidden
subject to
compensation
his promise.
to B for
the loss caused practise polygamy. A must make () Destruction of the Subject-matter
to her by the of this class. There
non-performanCe o Taylor v Caldwell (1863) 3 B&S 826 is the best example
frustrated on the destruction of the
promise to let out a music hall was held to have
Frustration hall. Similarly, in Howell v Coupland (1876) 1 QBD 258, the
defendant was not held
The "doctrine on his
of liable when he contracted to sell a specified quantity of potatoes to be grown
Sunilar to the supervening
"doctrine impo
mpossibility farm, but failed to supply them as the crop was destroyed by
a disease.
is wider of as
enunciated in Sec. 56 (Para 2)is
than the latter and frustration" known to the
as well as
failure covers both the English law. However, former
nc (2) Change of Circumstances
Ghose v
of
object
("frustration' physical impos
mpossibility (initial impossit The change of circumstances must be such as to make performance of the
contract
term" wasMugneer am Bangur& or
be read
in
vogue
into the
Co.
before the doctrine AIR subsequent impossibility) (Satyabi
1954 SC impossible or even extremely difficult in the manner and at the time contemplated,
44). The "doctrine of imp and thus upset altogether the purpose of the contract. Thus, where a ship was chartered
of contract of
the thing without when the frustration, i.e. an implied condition would to carry some goods, but before it could proceed there was an explosion in the ship
default of performance impliea
contractingbecomes
the boiler making it impossible to undertake the journey in the scheduled time, held that
of "Frustration of the impo ssible from the perishing
circumstances contract" means
of the so parties. the change in circumstances amounted to frustration of the contract
contract, fundamentaltal "occurrence
entered into the and entirely to be regarded by theof an intervening
as
as
ng event or change (3) Non-occurrence of a Contemplated Event
contract has contract". beyond what
The was law both as striking at the ro00 Sometimes the performance of a contract remains possible, but owing to the non-
understanding ceasedit was to bind the
based
word
"frustration"conten
parties
has failed. because the
a istemplated by the parties when they
sort of
occurrence of a contemplated event as the reason for the contract, the value of the
not that common basis
It is shorthand: 1 means that performance is destroyed. Thus in Parshotam Das v Batala Municipal Committee
the contract on
Ou which
* by mutual (AIR 1949 EP 301), the Municipal Committee leased out certain tonga stands to the
contract has D
been frustratet but
 stands throughout tho the year. The
driver used the
tonga he
Rs. 5,000, but no
of frustration applied
ed. route (due to the war), causing the inconvenience and loss to the
plaintiff for occuTed, the
doctrine
shipper, it was held
not having
contemplated event that there was no frustration of contract when the normal route was
closed; if there
of Party are more than one ways of performing a contract and the war cuts off
(4) Death or Incapacity only one of
require ersonalperformance by the them, the party is still bound to perform by the other way (reasonable or
nro..

nature or terms
of a contract practicable)
Where the
an end to the contract. The of the.
performance though it might be inconvenient or expensive [Tsakiorglou & Co. Lid. v Noblee &
his death or incapacity puts promisor in such cases e.p t Throl Gm BH (1962) AC 93].
depends upon the
existence of good
health
of the aint
v Davison (1871) LR 66 1 Exch).
to in a concert (Robinson
sing
a pichure, to play piano, Cases Not Covered by Doctrine of Frustration
Intervention
5) Government or Legislative
administrative intervention has so
Impossibility of performance is, as a rule, not an excuse for non-performance of a
A contract will be dissolved
when legislative or
contract'. Some of the cases where impossibility of performance is not an excuse are
fulfillment of the contract of a specific work so as to
directly operated upon the (1) Commerciol hardship or difficuty
transform the contemplated conditions of performance (1.e. when resumed, a diferent
contract from the contract when broken-ofi). Thus, where a vendor of land could not Commercial hardship" may make the performance umprofitable or more expensive
execute the sale-deed because he ceased to be the owner by operation of law, held about
or dilatory, but it is not sufficient to excuse performance, for it does "not bring
that the contract had become impossible of performance. The following cases explain a fundamentally different situation such as to frustrate the venture".

the effect of Government or Legislative intervention: difficult due to mill

Thus, merely because the procurement of the goods become
() Boothalinga Agencies v KTC. Poriaswami
(AIR 1969 SC 110)- The strike, or there is a rise in prices, or there is sudden depreciation of currency, or a
defendant had a licence to import 'chicory' for obstacle
able to earn the expected profits, or there is an unexpected
manufacturing coffee person will not be
the contract. Disappointed
powder. The licence was subject to the condition that he would use it to execution or the like, it is not enough to frustrate
in contracts. "He that agrees to do an
act must
only his factory. He agreed to sell the whole shipload. Before the expectations do not lead to frustrated
it" is the general rule of the law of
contract.
arival of the ship, the sale of such doing
imported goods was banned. The
contract thus held to have become void.
do it or pay damages for not

within the purview of Sec. 56:

The following cases do not fall
(i) Satyabrata Ghose v Mugneeram Bangur & Co. Chandra (AIR 1949 Cal 240)- The
defendant
case shows that an
(AIR 1954 SC 44)- The
intervention of a temporary nature, which does not
) Sachindra Nath v Gopal restaurant because the British troops were
for a
agreed to pay high rent
uproot the foundation of the contract, will not have clause in the agreement specially provided
the
dissolving effect. stationed in the towm and a
The defendant British troops will
will remain in force so long as
company started a scheme for the that "this agreement
into a housing
colony. The plaintiff was development
of a land tract
remain in this town". After some months, the locality
was declared out

The company
undertook to do the
granted a plot on payment of earnest money. Held that though it was possible that the
the land was development
work, but a considerable of bounds to the British troops.
rent apart from the expectation
requisitioned by the of portion defendant would not have paid
high
sucha
attempted to cancel the contract onGovernment for military
the ground that purposes. The defendant of deriving
from the British troops,
high profits
that was not sufficient

events its
performance had become impossible. Held by reason of the supervening to make out a case of frustration.
that the contract was not 9)- In this case, a
(ii) Naihati Jute Mills Ltd v frustrated. Saran Ram Charan Gopal (AIR 1952 SC
this case, held that Khyaliram
the effect of an Jagannath (AIR 1968 sC 522)- In
(ii) Ganga
v

made for supplying certain bales of cloth

manufactured by
contract was
added: "We shall go on
viewed in the
light of the terms of administrative intervention has to Dc Mills, Kanpur. The
contract
the New Victoria soon as they are supplied
that the
parties have undertaken anthe contract, and if the terms sno supplying goods
of the Victoria Mills as
to you
administrative changes, absolute failed to supply goods to the sellers
they cannot claim to beobligation regardless
mills". The mill
to us by the said
o
frustration. Held that there is
no
In that
case, for an the sellers pleaded
to
supply the import licence.agreement to discharged. and, therefore, breach of contract.

rules which The buyer purchase the imported raw jute, the frustration and the
sellers are liable for simple

required the failed to do buyer was Standard Cotton Co. (AIR

1945 Mad 291)- In this
Disallowing the plea of buyer to use an equal quantitybecause
so
of a change in Samuel Fitz & Co. v

frustration and holding the of Indian jute to obtain govern t (ii)

defendant placed an order with the plaintiffs for the supply
of
Government had completely ence. case, the
they intended to sell it in
Australia.
forbidden imports, Sec.buyer liable, it was held thar f the certain goods, making
it clear that
Government prohibited the import
of such goods.
(6) Intervention of War 56 would
have applied.
l But the Australian the contract
market. Held that the foundation of
Intervention of war or warlike The defendants lost their
be resold by the defendants to
their clients
created difficult conditions in the was not that
the goods should

However, where aquestions.

ship has toGenerally, it is a performance of a contract has often in Australia. It
was a case of
breach of contract.

longer routeground of frustration of the

take a
tract.
because of the closure o con Imal
the
 An abnormal rise or fall in price is a commercial hardship. But,
inn a
(v)
case, a 400% escalation of prices was
held to have ended (on account
of frustration) the contract.

(2) Self-induced frustration

The doctrine of frustration does not apply to cases of non-performance of the contract
due to the events happening because of the default of the contracting party himself.
For example, if the intervention of war is due to the delay caused by the negligence
of a party, the principle of frustration cannot be relied upon.

(3) Failure of one of the objects

When there are several purposes for which the contract is entered into, failure of one
of the objects does not terminate the contract. Thus, where a ship was chartered by
the defendant for two days for the purpose of viewing the naval review and for a day's
cruise round the fleet, but the review was cancelled, the defendant was held liable to
pay the hire amount (Herne Bay Steam Boat Co. v Hutton (1903) 2 KB 683).

(4) Completed transfers or Executed contracts

Sec. 56 covers cases of executory (future) contracts
only, and does not apply to
executed (present) contracts. Thus, in Raja Dhruv Dev v Harmohinder
Raja Singh
(AIR 1968 SC 1024) where there was a lease of land for one year and the lessee was
given possession, the fact that the lessee could not work the land (for any crops) due
to partition of the
country was held not to attract Sec. 56, as it was the case of a
completed transfer. The lessee's action for the refund of the rent was thus dismissed.
It has been held that if the transfer of lease has not been
made complete, the doctrine
of frustration would apply.
Where a tenant was
initially evicted but later on granted possession by the
court; meanwhile, the municipality demolished the tenanted
landlord pleaded frustration, it was held that the building and thus the
contract of lease had not becomee
impossible of performance because the landlord could reconstruct the
Chand v Chuni Lal AIR 1990 P & H premises (Amnir
345).
In K. J. Coal Co. Ltd. v Mercantile Bank
Bank had advanced a huge amount of (AIR 1981 Cal 418), the Mercantile
money to K. J. Coal Co. through overdraft.
Thereafter the coal company was nationalized. In an
action to recover
the company
pleaded non-liability to pay on the ground of frustration back the loan,
view of nationalization of of contract in
company. Held that. such change in the
simpliciter cannot amount to supervention of an event management
frustrating the contract.