The doctrine of frustration in contract law was initially defined by two points, namely:
(i) the doctrine was to be only permitted where it was raised as a defense to a primary assumption on which the agreement was reached; and
(ii) the parties were entitled to insert provisions as a contingency measure to provide for the occurrence of the same.
As general rule parties to contract are having an intention towards the fulfillment of their part and in case of a 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 that 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 “ lex non cogit ad impossibilia”.
lex non cogit ad impossibilia - is an age-old maxim meaning that the law does not compel a man to do which he cannot possibly perform. In Hughey v. JMS Development, Justice Owens of the United States Court of Appeals used these words.
The Indian Contract Act, 1872, does not define the term “frustration of contract”. However, the doctrine of frustration is enshrined under section 56 of the Act. According to section 56, an agreement to do an impossible act is in itself void. Further, it states that when a contract to do an act becomes impossible, or, by reason of some event which the promisor cannot prevent, it becomes unlawful, the whole contract becomes void when the act becomes impossible or unlawful.
Generally, the frustration of a contract can be in the following cases -
Death or incapacity of a party:- Where a party to the contract has died after entering into a contract or the party is incapable of performing the contract, in such a situation the contract will be void ( Robinson v Davison).
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).
Frustration due to change of circumstances:- This particular situation deals with those cases where there was no physical impossibility of the performance of the contract, but because of the change in circumstances, the main purpose for which the contract was entered has been defeated.
Effect of the doctrine of Frustration -
1. The contract is frustrated automatically– The general rule is that the occurrence of the frustrating event puts an end to the contract automatically. The parties are not required to rescind the contract as the obligations of the parties get terminated immediately after the contract is frustrated.
2. Further obligations are discharged- Both the parties are discharged from any obligations after the contract is said to be frustrated.
3. Accrued obligations- The legal rights or obligations already accrued before the frustrating event occurred are left undisturbed.
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