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. 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.  On a plain reading of Section 56 of the Contract Act, it is evident that the section envisages some impossibility or unlawfulness of the performance of the act which the parties had not contemplated.  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’. If you found any in this website, please report us at info@lawcorner.in. The first paragraph of section 56 represents the same law as in England. Read PDF Article 61 Supervening Impossibility Of Performance performance of the contract and thereby contract is discharged, (Section 56, Indian Contract Act, 1872). Section 56 of the Contract Act stipulates that a underlying contract is rendered void when obligations under an agreement become impossible to perform or where occurrence of an unforeseeable supervening event frustrates performance of the agreement. The parties to such a contract are discharged. The second paragraph has the effect of turning into general rule, the limited exceptions under the English Law. Dispute Resolution - Commercial Litigation, Dispute Resolution - International Arbitration. 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 contract act, deals with the impossibility of performance. 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. The doctrine of frustration has been envisaged in Chapter IV in Section 562 of the Contract Act. The doctrine of frustration is a doctrine of special case of the discharge of contract by an impossibility to perform it. 474. But section 56 only deals with case of subsequent impossibility as opposed to case of initial impossibility. 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. In the above case the performance of the contract had become physically impossible because of the disappearance of the subject matter. 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. CTRL + SPACE for auto-complete. 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. 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. The second paragraph has been in fertile source of litigation as the court has deliberated much on the interpretation of the word impossible. The performance of obligation under a may be hindered by unexpected supervening events leading to contractual uncertainties. 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. Alternatively, it may supervene. 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.  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. We try our level best to avoid any misinformation or abusive content. void contract. In that case, it would be impossibility ab initio. 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 Mukherjee J. further state while referring to the second paragraph to section 56. 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". Doctrine of Frustration basically enumerates on the impossibility to perform the contract. 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.  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. What is Restraining Order And How to Get A Restraining Order in India? Section 56 of ICA 1872 deals with the doctrine of frustration of contract. When a party to a contract is unable to perform its contractual obligation due to a supervening impossibility which the party could not prevent, then the defaulting party may be excused from performance of the contract in accordance with section 56 of the Indian Contract Act, 1872 or if the contract has a force majeure clause then in accordance with such clause - what is popularly referred … A thorough explanation of the section can be sought from the celebrated and seminal decision of Satyabrataghose v/s MugneeramBangur and Co.  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 concept of frustration of contract is principally based on impossibility of performance of the contract. 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. 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. It basically means, a contract could not be executed because of such an event that was beyond the control of both the parties. The doctrine of frustration paves the way for a just consequence of such an unfortunate event which has happened without any fault of the contracting parties. Supervening impossibility or illegality involving action contrary to law or public policy. Section 56 covers only ‘supervening impossibility and not implied terms’. Impossibility existing at the time of contract. According to Para 2 of Section 56, which states that, “A contract to do an act which after the contract is made, becomes impossible, or by reasons of some event which the promisor could not prevent. This article is authored by Navneet Bhardwaj, B.A. Thus, a contract would come under the purview of Section 56 of the Contract Act even if it is not an absolute impossibility, but the contract has fundamentally changed, which the parties had not contemplated at the time of the agreement. It is applied when parties did not have an intention regarding the supervening event and when there is no implied term in the contract. 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. It is covered by Section 56 of …  It is also worthwhile to note Section 659 of the Contract Act in the context of the frustration of contract. Define Doctrine of supervening impossibility and Explain the effects on the performance of the contract.  In order to establish that a contract is frustrated, the below mentioned conditions are required to be satisfied:.  The doctrine of frustration was initially, in English laws, based on the notion of ‘implied contract’ i.e. 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. Doctrine of Supervening Impossibility. When frustration occurs, it avoids the contract itself and discharges both parties automatically8. However, impossibility to perform arising subsequently to the agreement will not, as a rule, relieve the promisor from performing his part in all cases. Further, on account of such impossibility, the whole contract becomes void when the act becomes impossible or unlawful. Section 56 of the Contract Act lays down positive rules and does not leave anything to be determined according to the intention of the parties. Sec 56 of the Indian Contract Act, 1956, enumerates on the “Doctrine of Frustration” of a contract. The Section is reproduced “An agreement to do an act impossible in itself is void”.  Whilst entering into various commercial documents, parties seldom foresee their contract getting frustrated. Section 56 in The Indian Contract Act, 1872. It must be borne in mind, however, that Section 56 lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties". Initial impossibility [S.56] Section 56 of The Indian Contracts Act, 1872 begins by laying down a straightforward principle that “an agreement to do an act impossible in itself is void”. The relief under this section is given by the court on the ground of subsequent impossibility when it finds out that the whole purpose or the basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond the control of the parties. 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. This doctrine is treated as an expectation to the general rule which provides for compensation in case of breach of contract.  The concept of frustration of contract dates centuries back to the ‘Doctrine of Frustration’ and has, thereafter, evolved in the English Laws. It say that any act which was to performed other the contract was made become impossible or unlawful to perform. Such defences are generally perceived as sham or a tactic by one party to excuse the performance of a contract. 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. What is Compoundable Offence And Non Compoundable Offence?  The assistance under Section 56 or rather the plea of the contract having frustrated is generally taken as a defence by a party who is under an obligation to perform a part of contract. It was observed that the impossibility contemplated by section of the contract is not confined to something which is not humanely possible. Role Of UNHCR In Protection Of Refugee And Other Displaced Person? A contract is an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. 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). – 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. GENESIS OF FRUSTRATION OF CONTRACT. As per Section 56 , an agreement to do an impossible act is itself void. 56. However, some portion of the area comprised in the scheme was requisitioned for military purposes. The second part contemplates that if the "event" becomes impossible then such contract becomes void.  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 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. This section states as follow: An agreement to do an act impossible in itself is void. Compensation for loss through non-performance of act known to be impossible or unlawful: Where one person has promised to be something which he knew or, with reasonable diligence, might have known, and which the promisee did not know to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise. However, this arises at the time when the promisor's performance is due. 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 … 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.  In India, since Section 56 of the Contract Act, itself, embodies the doctrine of frustration, the controversy is fairly narrow.  The consequence of a contract getting frustrated is that the contract becomes ‘void’. Such impossibility usually arises due to facts that the promisor had no reason to anticipate and did not contribute to the occurrence of. "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. Agreement to do impossible act.—An agreement to do an act impossible in itself is void. For instance, an agreement to discover treasure by magic, because of its impossibility of performance, is 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 … Another important aspect to check for the application of impossibility is that the foundation of the contract gets upset. Bar Council of India Shall pay Rs. 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. Indeed, since the very aspect of a contract getting frustrated may not be anticipated by the parties whilst executing the contract. 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". 5000/- Stipend to New... What is Article 370? 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. 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. LL.B (Hons.) This is called “Doctrine or Supervening Impossibility”. 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. 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. In deciding cases in India, the only doctrine that the Courts follow is of supervening impossibility as laid down in section 56, being impossibility in … unlawful becomes void when the act becomes impassible or … This is known as “doctrine of frustration” under the English law and is known as “doctrine of supervening impossibility”. However, the term ‘frustration of contract’, explicitly, is not found in the Contract Act. The aspect of discharge of contract has to, therefore, be analysed within the contours of Section 56 of the Contract Act. The doctrine of supervening impossibility/frustration is cherished in the Indian Contract Act. Scope and applicability 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. 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