DOCTRINE OF FRUSTATION

This article was written by Hitarth Dixit, a student of Rajiv Gandhi National University of Law.

Meaning Of Contract

The Indian Contract Act, 1872 is the law that oversees contracts in India. It went into power in the year 1872. It is enforceable in all the states with the exception of the State of Jammu and Kashmir. It determines the situations in which the promises made by the parties to a contract shall be legally binding on them.

Provisions

• General Principles of Law and Contract  —– Section 1 – 75
• Contracts relating to the Sale of Goods ——– Section 76 to 129
• Special Contracts ——- Section 125 to 238
• Contracts relating to Partnership —— Section 239 to 266

previously, the Indian Contract Act, 1872 contained provisions which deals with Sale of Goods (Movable Property) and Partnership. Presently these two arrangements have been removed from the Act and are put in two separate acts known as the Sale of Goods Act, 1930, and the Indian Partnership Act, 1932. So at present, the Indian Contract Act incorporates the General Principles of Contract and Special Contracts only.[1]

Definition of a Contract –

Section 2(h) of the Indian Contract Act defines the term contract as “an agreement enforceable by law is a contract.” So, a contract is an agreement plus legal enforceability[2].

Essentials Of Contract-

1. Offer and Acceptance
2. Intention to create a legal relationship
3. Lawful Consideration
4. Compotent parties
5. Free consent
6. Lawful Object
7. Not expressely declared void[3]

Meaning of frustration

To understand the concept of frustration first we analyze one famous case decided by BLACKBURN J in the case of Taylor vs. Caldwell[4] “rule is only applicable when the contract is positive and absolute, and not subject to any condition either expressed or implied”. The fact of the case is that the respondents had consented to let the plaintiff use their musical hall between specific dates to hold a show there. In any case, before that first day on which a show was to be given, the lobby was obliterated by fire without the fault of either party. It was held that the contract was not absolute, as its performance depended upon the continued existence of the hall. It was, therefore, “subject to an implied condition that the parties shall be excused in case, before breach, performance becomes impossible from the perishing of thing without default of the contractor.[5]”

 Thus, the doctrine of frustration comes into play in two types of situation, first, where the performance is physically cut off, and, second, where the object has failed.

Doctrine of frustration under Indian law:

When the performance of the contract becomes impossible, the purpose becomes frustrated. If the performance becomes impossible, because of a supervening event the promissory is executed from the performance of the contract. This is known as doctrine of frustration under English law, and is covered by section 56 of Indian contract Act. The basis of the doctrine of frustration was explained by Mkherjea J. In the Supreme Court decision of Satyabarta Ghose v Mugneeram.[6]

The presentation of the agreement had become physically impossible on account of the disappearance of the subject matter. But the guideline isn’t limited to physical impossibilities. Its extends likewise to cases where the exhibition of the agreement is truly possible, but the object of the parties fail to materialise,like the famous case Krell v Henry[7].

The facts of the case are:-

the litigant to hire from the plaintiff a flat for June 26 and 27,on which days it had been reported that the coronation would go along that place.A some portion of the lease was paid ahead of time ,But the parade having been dropped inferable from the illness,the respondent wouldn’t pay the equalization.

It was held that the real object of the contract,as recognised by both contracting parties,was to have a view of the coronation procession was,therefore,the foundation of the contract.The object of the contract was frustated by non happening of the coronation and the plantiff was not entiteled to recover the balance of the balance of the rent.

Thus, the doctrine of frustration comes into play in two types of situation, first where the booth he performance is physically cut offhand second, where the object has failed. The Supreme Court of India has held that Section 56 will apply to both kinds of frustration.[8]

Application of doctrine of frustration

A contract may be frustrated if it become impossible to perform or it purposes become frustrated or if performance becomes illegal. The doctrine of frustration of contract is applicable to a range of contract.

The principle of frustration of contract or, of impossibility of performance is applicable to a great variety of contracts. It is therefore, not possible to lay down an exhaustive list of situation in which the doctrine is going to be applied so as to excuse performance. The following grounds are-

Destruction of Subject-Matter

The doctrine of impossibility applies with full force where the actual and specific subject matter of contract has ceased to exist ‘Taylor v Coldwell’[9]’ is the best example of this class’.  There, a promise to let out a music hall. The another case is ‘Howell v Copland’

            The defendant contracted to sell a specified quantity of potatoes to be grown on his farm, but failed to supply them as the crop was destroyed by a disease.

Change of circumstances–

A contract will frustrate, ‘’where circumstances arise which make the performance of the contract impossible in the manner and at the time contemplated.[10] KAPUR  J the Punjab high court in  Pameshwari Das Mehra v Ram chand[11] explained the principle thus.’’ It is clear that if there is entirely unanticipated change of circumstances has affected the performance of the contract to such as extent as to make it virtually impossible or even extremely difficult or harzardous.If that be the case, the change of circumstances not having been brought about by the fault of either party, the court will not enforce the contract.

Non- occurrence of particular event

The principal of frustration has also been held to apply to cases concerning of an expected event. In the so-called Coronation cases which arose out of the postponed of the coronation of King Edward VII owing to his sudden illness, it was applied to contracts the performance of which depended on the existence of occurrence of particular state of things forming the basis on which the contract had been made.[12]

Death or incapacity for personal

Where performance of obligation under a contract for the personal service is rendered impossible or radically different by the death or incapacitating illness of the promisor, the contract will be frustrated.In Robinson v Davinson in this case D’s wife an eminent piano player, perform at a concert but was prevented from doing so by a dangerous illness. An action was brought against D claiming damages for breach of contract.

It was held that the contract was discharged by D’s wife illness, and it was not therefore broken by her failure to perform, nor on the other hand, could she have insisted on performing when she was unfit to do so as frustration is not brought about by an act of election. These are example of cases where performance by relevant party is personal and cannot be carried out by anyone else so that death or illness gives rise to frustration

Change in the law

Their performance of contract may be made legally impossible either by a change in the law or by a change in the operation of the law by reason of new facts supervening. The law many actually forbid the doing of some act undertaken in the contract;[13] or it may take form the control of the promisor something in respect of which it has contracted to act or not to act in a certain way.

For example,The outbreak of war is another event which, by changing the operation of the law, may have the effect of abrogating obligation outstanding under a contract by reason of supervening illegality, if one of the parties resides in this country and the other in enemy or enemy occupied territory, and the contract is one which involves dealing with the enemy. So strong is public policy consideration in this situation that the contract will be wholly frustrated, even though the parties themselves provide that their obligations shall be merely postponed.[14]

Conclusion

Under the Indian law, the doctrine of frustration is an aspect of law of discharge of contract by reason of supervening impossibility or legality of contract to be and house comes within the preview of sec 56 of Indian contract act 1872. Therefore, the position in effect is that in Indian law it is not necessary to have any resort to any legal fiction or legal theory for application of doctrine of frustration. The court in India appear to have understood the real purport of the provision of the act and then they are applying them correctly to actual factual situation of contract arising before them for decision[15]

In the view of the provision of sec 56, the Indian law on doctrine of frustration seems to lie comparatively on a more sound footing then the English Law. It is significant to note that fear of misuse of principle of supervening impossibility by any dishonest party has duly been taken care of vide paragraph three of sec 56 which obligation the person, who with any innocent person in spite of the fact that such agreement is otherwise void. [16]This type of structural agreement is not found under English law. The Indian courts have developed it by process of interpretation.

REFERENCES

ARTICLES

1. Journal of Indian Law Institute, Vol.37, No.4 (1995)
2. The Cambridge Law Journal, Vol. 24, No. 2 (Nov., 1966)
3. http://www.docstoc.com/docs/23799980/The-Doctrine-of-Frustration

STATUTES REFERRED

1. The Indian Contract Act, 1872
2. The Law Reform (Frustrated Contracts) Act, 1943

[1] https://legodesk.com/legopedia/indian-contract-act-1872/

[2] Indian Contract Act,s 2(h)

[3] Indian Contract Act,s 10

[4] QUEEN’S BENCH,(1863) 3 B &S 826

[5] Supranote 4

[6] AIR 1954  S.C.47 ,contract-1 R.K.Bangia

[7] (1903) 2KB 740(1900-3)All ER Rep 20(CA)

[8] AIR 1949PC 144

[9] (1863)3 BS 826;122 ER 309

[10] Viscount Maugham in joseph Constantine line ltd v imperial smelting corpn, 1942AC 154(1941)2All ER 165 (HL)

[11] AIR 1952punj 34,38

[12] https://www.lawteacher.net/example-essays/contract-frustrations-krell.php

[13] Denny, Mott and Dickson ltd v B Foster and Co Ltd(1944) AC 265

[14] Ertel Biber and Co Rio Tinto co ltd

[15] Journal of Indian law Institute, Vol 37,No 4(1995) p. 446

[16] Indian Contract Act,s 56(3)