INTRODUCTION

❖ When the performance of the contract becomes impossible, the

purpose which the parties have in mind is frustrated. If the
performance becomes impossible due to a supervening event, the
promisor is excused from the performance of his part of the
contract
❖ACCORDING to Section 56, an agreement to do an act impossible
in itself is void (for example, an agreement to discover treasure by
magic).
 INTRODUCTION
❖It can be understood using the Supreme Court case, Satyabrata
Ghose V. Mugneeram, which states that: The essential idea on
which this doctrine is based is that impossibility of performance of
the contract; they are often used as interchangeable expressions. The
changed circumstances make performance of the contract impossible
and absolve the parties of further performance as they did not
promise to perform impossibility.
 IMPOSSIBILITY OF PERFORMANCE
AMOUNTS TO FRUSTRATION

❖A man can be expected to do what is humanly possible but he

cannot be expected morally or legally to do what is not physically
possible. It cannot be disputed that when a thing is beyond the human
control it cannot be expected from the party which had undertaken to
do the work to suffer the consequences of not proceeding with the
contract work and in such a situation both the parties are relieved
from their contractual responsibilities.
❖The word "impossible" in Section 56 of the Indian Contract Act, 1872 has
not been used in the sense of physical or literal impossibility. The
performance of an act may not be literally impossible, but it may be
impracticable and unless from the point of view of the object and which the
parties had in view; and if an untoward event or change of circumstances
totally upsets the very foundation upon which the parties rested their
bargain, it can very well be said that the promisor finds it impossible to do
the act which he promised to do.
❖The essential principles on which the doctrine of frustration is based
is the impossibility, or, rather, the impracticability in law or fact of the
performance of a contract brought about by an unforeseen or
unforeseeable sweeping change in the circumstances intervening after
the contract was made.
 SUSHEILA DEVI V. HARI SINGH
❖In Susheila Devi V. Hari Singh, it is again pointed out that it is incorrect to
state that section 56 of the Indian Contract Act applies only to cases of
physical impossibility only. It also covers contracts which become impossible
as its performance becomes impractical or useless. In this case A agreed to give
his lands on lease for a period of three years. Under this agreement the lessee
was personally responsible to take possession of the land in Gujranwalla, due
the partition of India and Pakistan in 1947 and the land became a part of
Pakistan, where as B resided in India and could not enjoy possession of the
land. He claimed for his advance and security deposit back as the contract had
become frustrated under the given circumstances that B could no longer
obtain possession of the land. The court held up his claim as it was evident
that the contract was frustrated.
 SUSHEILA DEVI V. HARI SINGH
❖Justice, J. Hegde explains this further by stating that “section 56 of The Indian
Contract Act lays down a rule of positive law and does not leave the matter to be
determined according to the intention of the parties. The impossibilities
contemplated by section 56 of Contract Act is not confined to something which is
not humanly possible. If the performance of a contract becomes impractical or
useless having regard to the object and purpose that the parties had in view then it
must be held that the performance of the contract has become impossible. But the
supervening events should take away the basis of the contract and it should be of
such a character that it strikes at the root of the contract.”
 HAPPENING OF UNPRECEDENTED
EVENTS CAUSES FRUSTRATION

❖To attract the plea of frustration, it must be shown that the situation has
changed so drastically and so radically that neither party to the contract
could have at all foreseen that because of something happening at another
place which may be a foreign country would result in execution of the
contract almost as good as an impossibility. The impact which the market
receives due to an event happening elsewhere in the guiding factor for
determining whether or not frustration has occurred.
❖Where after the firm price contract for supply of transformers there was a
subsequent 400% rise in price of transformer oil due to the war, there was
frustration of contract. The abnormal increase in price due to war
condition, was an untoward event or change of circumstances which
"totally upset the very foundation upon which the parties rested their
bargain." Therefore, supplier could be said to be finding itself impossible to
supply the transformers which it promised to do.
❖The parties to an executory contract are often faced, in the course of
carrying it out, with a turn of event which they did not at all anticipate
- a wholly abnormal rise or fall in prices, a sudden depreciation of
currency, an unexpected obstacle to execution, or the like. Yet this
does not in itself affect the bargain they have made. If, on the other
hand, a consideration of the terms of the contract, in the light of the
circums
 TAYLOR V. CALDWELL
❖In Taylor V. Caldwell, it was held that when the contract is not
positive and absolute, but subject to an express or implied condition.
Eg: if A agreed with B to give him the use of the music halls and
gardens for holding a concert for duration of four days for a rent of
10,000 Rs per day, B agrees to the same. But before the concert could
take place the music hall was destroyed in a fire. B sued A for breach
of contract. The contract was held void and therefore A was not held
liable to pay compensation to B on the grounds of impossibility of
performance of contract.
❖The principle seems to be in a contract which is impossible of performance
depends on continued existed of the person or thing, a condition of impossibility
arises from the perishing of that person or thing, In this case the performance of
the contract was based on the existence and availability of the music hall during
the dates of the concert which was of essence in order for the contract to be
performable. Thus when the music hall ceased to exist without fault of either party
involved in the contract, both the parties are excused from performing their part
of the contract. Hence there is no remedy of compensation on part of any of the
parties involved. This is known as the Doctrine of Frustration
 CONCLUSION

❖Be happy not frustrated.