FRUSTRATION OF CONTRACTS

Submitted to : Mrs. DHANYA JOHN

(Faculty : Contract Law)

Submitted by : NAME

Submitted on :

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 CERTIFICATE OF DECLARATION
I, NAME, have undergone research of the project work titled “FRUSTRATION OF
CONTRACTS”, as a student of Contract Law, hereby declare that- this Research Project has
been prepared by the student for academic purpose only, & is the outcome of the
investigation done by me & also prepared by myself under the supervision of Mrs. DHANYA
JOHN. The views expressed in the report are personal to the student & do not reflect the
views of any authority or any other person, & do not bind the statute in any manner.

I also declare that this Research Paper or any part, thereof has not been or is not being
submitted elsewhere for the award of any degree or Diploma. This report is the intellectual
property of the on the part of student research work, & the same or any part thereof may not
be used in any manner whatsoever in writing.

NAME

2nd semester

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 CERTIFICATE OF ORIGINALITY
This is to certify that NAME, PRN :, student of 2nd Semester of B.A.LL.B.(Hons.), Sandip
university has undergone research of the project work titled “FRUSTRATION OF
CONTRACTS”, in partial fulfilment of the subject of Contract Law. His performance in
research work is up to the level.

Place: Nashik Mrs. DHANYA JOHN

(Faculty- Contract Law)

Sandip University

Date:

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 ACKNOWLEDGMENT
At the outset, I would like to express my heartfelt gratitude & thank my teacher, for putting
her trust in me & giving me a project topic such as this & for having the faith in me to
deliver. Ma’am, thank you for an opportunity to help me grow.

My gratitude also goes out to the staff & administration of Sandip university for the
infrastructure in the form of our library & IT Lab that was a source of great help for the
completion of this project.

NAME

(Semester Second)

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 LIST OF CASES

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 LIST OF ABBREVATIONS

ICA :- Indian Contract Act

& :- And
Vs. :- Versus
AIR :- All India Record
DDA :- Delhi Development Authority
SC :- Supreme Court

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 TABLE OF CONTENTS

1. CHAPTER 1 : INTRODUCTION
2. RESEARCH METHODOLOGY

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 CHAPTER 1 : INTRODUCTION

Frustration in general scenario means defeated and this term has been widely used in
agreements and contracts between parties. The term frustration is being used to deal with
unsuccessful transactions which could not be completed due to any reason. In law of
contracts doctrine of frustration has emerged as one of the most common issues which have
arrived to deal with failed contracts.

The doctrine of frustration states that frustration occurs when an unforeseen event renders
performance of a contract impossible or radically different from that originally contemplated
by the parties. No party is considered at fault.

If a contract is found to be frustrated, it is automatically terminated. All future obligations of

the parties to the contract are discharged.

RESEARCH METHODOLOGY

PRESPECTIVE OF THE RESEARCH

This research paper deals with Doctrine of Frustration of Contract in Indian contract law

RATIONALE

The rationale behind this research is to understand what Frustration of Contract means under
ICA 1872

NATURE OF STUDY

The nature of the study in this research is doctrinal & is descriptive & analytical

SOURCES OF DATA

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The Research paper is primarily based on the ICA 1872 & largely referred from electronic
source and books, case laws, journals, and guided by faculty of Contract law.

REVIEW OF LITERATURE

Contract and specific relief by Avatar Singh1 published by Eastern Book Company (27
February 2021).

The Indian Contract act 1872 by Sir Dinshaw Fardunji mulla2 published by Lexis Nexis First
edition (28 October 2015).

OBJECTIVES

To understand what Frustration Of Contract means.

LIMITATIONS OF THE STUDY

The limitation of the study “Frustration of Contract” is that the Contract comes to an end by
frustration

CONTRIBUTION OF THE STUDY

The research has helped me to understand and clear my concepts regarding Frustration of
contracts and how a Contract gets frustrated

1
Specific Relief Act by Avatar Singh
2
Indian contract act 1872 by Dinshaw Fardunji Mulla

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CHAPTER 2 : WHAT IS A FRUSTRATING EVENT IN
CONTRACT LAW?

A frustrating event is one which makes performance of the contract radically different to
what the parties intended when the contract was agreed upon.

As general rule parties to contract are having an intention towards the fulfillment of their part
and in case of breach, party breaching is liable to compensate for the same. But an exception
to this rule is laid down in Section 56 of the Indian contract act 1872. Section 56 deals with
the doctrine of frustration as being acts which cannot be performed. Under this doctrine a
promisor is relieved of any liability under a contract in the event of the breach of contract and
contract will be deemed to be void.

Section 56 is based on the maxim “ les non cogit ad impossibilia” which means that the law
will not compel a man to do what he cannot possibly perform.

The basis of the doctrine of frustration was explained by Supreme Court in the case
of Satyabrata Ghose v. Mugneeram in which Justice Mukherjee held that the basic idea upon
which doctrine of frustration is based is that of the impossibility of performance of the
contract and the expression frustration and impossibility can also be used as synonym.

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 CHAPTER 3 : THE DOCTRINE OF FRUSTRATION IS
HOWEVER APPLICABLE ONLY IN 2 CASES

 If the object of the contract has become impossible to perform

Or

 An event has occurred making the performance of the contract to be impossible

beyond the Control of promisor.

Illustration

A, a resident of India entered into a contract with B, a resident of China for the export of 550
heavy Trucks. Initially, 100 Trucks were delivered, later war was announced between India
and China and the government of India suspended all the business transactions with China.
Now after this contract has become void.

 A and B contract to marry each other. Before the time fixed for marriage A dies and
therefore the said contract between A and B will become void as one party to a
contract has died.

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CHAPTER 4 : THE CONDITION NECESSARY FOR THE
APPLICATION OF SECTION 56

 There exist a valid and subsisting contract between the parties:- Existence of a
valid contract is the foremost condition for the application of Section 56. The valid
contract includes a contract entered in between competent persons and which is
followed by some consideration.

 There must be some part of the contract which is yet to be performed:- Section 56
will have applicability only if there is some part of the contract which is yet to be
performed and without performing it the ultimate purpose of the contract is not
fulfilled.

 The contract after it is entered into becomes impossible of performance:- Another

important condition for the application of section 56 is that the contract after it has
been entered into has become impossible to perform and cannot be performed and
therefore contract stands void.

Generally, frustration of contract can be in the following cases

1. Death or incapacity of a party:- Where a party to the contract has died after
entering into contract or the party is incapable of performing the contract, in such a
situation the contract will be void ( Robinson v Davison).

2. Frustration by virtue of legislation:- Where, a law promulgated after the contract

is made, makes the performance of the agreement impossible and thereby the
agreement becomes void ( Rozan Mian v Tahera Begum).

3. Frustration due to change of circumstances:- This particular situation deals with

those cases where there was no physical impossibility of performance of the
contract, but because of the change in circumstances, the main purpose for which
the contract was entered has been defeated.

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 CHAPTER 5 : INITIAL VS SUBSEQUENT IMPOSSIBILITY
Initial impossibility

The aim of any contract is for the parties to fulfil their respective promises, and if the contract
is impossible to fulfil, the parties will never enter into it. The term “initial impossibility”
refers to situations in which the contract was impossible to fulfil from the start. As per first
paragraph of Section 56 the impossibility must be pre-existing in fact or in law.

For example, if a man who is already married enters into a contract with a woman and
promises to marry her, knowing that he cannot have two wives at the same time, then that
contract would be void. It doesn’t matter whether the promisor was aware of such
impossibility or not, anyway it would make the contract void.

Subsequent impossibility

It is also known as supervening impossibility. The second paragraph of Section 56 mentions

the effects of the subsequent impossibilities on the contract’s performance. When a contract
is made between the parties, it is often very possible to carry it out. However, something
comes afterwards that makes it difficult or illegal to carry out the task. In this case, the
contract is considered void. This case is called Post-contractual or Subsequent Impossibility.

Some examples of such impossibility are: When one of the parties to a marriage arrangement
becomes insane, or when a contract is made for the import of merchandise and the import is
then prohibited by the government, or when a musician contracts to sing and becomes too ill
to do so, the contract becomes void in any case.

Generally, it is not due to the error of either of the parties so as a consequence the contract
and its obligations are terminated.

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 CHAPTER 6 : CASE LAWS

Satyabrata v. Mugneeram

This case established the scope of Section 56 under Indian Law. The facts of the case are as
follows: The respondent’s company was involved in purchasing large plots of lands and
subsequently they used to divide these large plots and divide it into smaller plots for
individuals to purchase, individuals were given an incentive to purchase these plots as the
respondents’ company developed roads, tanks, parks and everything which was necessary for
residential purposes. On 30th November 1946, the appellant purchased a plot but the land
was requisitioned by the Collector. So the respondent offered to give the appellant the
amount which he gave for the purchase of the plot back. The appellant denied this and filed a
suit.

The Supreme Court held that reasoning given by English law for frustration is not applicable
to Indian law and “impossibility” not just means physical and literal impossibility but
impossibility under Section 56 means practical impossibility as well. The court observed that
if the fulfillment of the contract becomes impossible not just due to literal physical
impossibility but also when the object of the contract becomes impractical to fulfill it would
be under the ambit of Section 56 of the Indian Contract Act.

Sushila Devi v. Hari Singh

This case is another case which established that impossibility under Section 56 does not
mean just literal impossibility but practical impossibility as well. The facts of the case are as
follows: The appellants were owners of a village and they leased a property in the village to
the respondent for a period of three years starting from Jan, 1947 but as the India and
Pakistan partition was going on the village became a part of Pakistan and it was not possible
for the respondent to use the land due to communal reasons. The appellants argue that it was
self-imposed frustration but it was held that if the fulfillment of the contract becomes
practically impossible it would be deemed to be frustrated under section 56 of the Indian
Contract Act.

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Nirmala Anand v. Advent Corporation Pvt. Ltd

This case held that frustration automatically brings a contract to an end. It held that the
contract stands until the event which frustrates it but after the occurrence of that event the
contract automatically gets frustrated.

CONCLUSION
Doctrine of frustration as enshrined in Section 56 of the Indian contract act 1872 deals with
those cases where the performance of contract has been frustrated and the performance of it
has become impossible to perform due to any unavoidable reason or condition. This doctrine
is treated as an exception to the general rule which provides for compensation in case of
breach of contract. But section 56 only deals with cases of subsequent impossibility as
opposed to cases of initial impossibility.

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