Thus, in terms of Section 32 of the Contract Act, if the designated event on which the contract is contingent becomes impossible, such contract becomes void.  It is also worthwhile to note Section 659 of the Contract Act in the context of the frustration of contract. 8 The Law of Contract by P C Markanda 2nd Edition 2008; Pg No 893 The company attempted to rescind the contract on the ground of supervening impossibility. Section 56 states that an agreement to do an act which becomes impossible or unlawful is void.  The term ‘frustration’ has been defined in the Black’s Law Dictionary3 as “The prevention or hindering of the attainment of a goal, such as contractual performance” and in relation to ‘contracts’ the terms has been described as "The doctrine that if a party’s principal purpose is substianlly frustrated by unanticipated changed circumstances, that party’s duties are discharged and the contract is considered terminated". 5000/- Stipend to New... What is Article 370? What would not constitute ground of impossibility: Various decisions which have identified certain situations as not constituting grounds of impossibility –  While discussing frustration of contract it may also be important to note the difference between Section 326 and Section 56 of the Contract Act. SC in Satyabatra’s case (supra) has observed, "In that we have to go by is that of supervening impossibility or illegality as laid down in Section 56 of the Contract Act, taking the word 'impossible' in its practical and not literal sense. Considering the large implication on the obligation and binding nature of a valid contract it became important to analyse the factor that guide the court determine its application unlike common law the Indian contract law explicitly incorporates the doctrine of frustration under section 56 of the contract act however the evolution of this doctrine in India has been greatly influenced by English law. 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. Doctrine of frustration as enshrined in section 56 of the Indian contract act 1872 deals with those case where the performance of contract has been frustrated and the performance of it is has become impossible to perform due to any unavoidable reason or condition. 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. In simple words, on the happening of an event which makes the contract impossible or unlawful, the contract stands determined and discharged. 1960 S.C.588. The second paragraph has the effect of turning into general rule, the limited exceptions under the English Law. GENESIS OF FRUSTRATION OF CONTRACT. 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 is a doctrine of special case of the discharge of contract by an impossibility to perform it. 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. LL.B (Hons.) Section 56 of the Indian Contract Act 1872 deals with different situations when it becomes impossible to perform the contract impossibility maybe at the time of making of contract for agreement or maybe supervening impossibility or illegality, Section 56 of the act provides This is known as “doctrine of frustration” under the English law and is known as “doctrine of supervening impossibility”. There exist three basic conditions that are needed to satisfy the doctrine under section56 there must be a subsisting contract some part of the contract is still to be performed and performance has become impossible after the contract is entered into. Section 56 of the Indian Contract Act, 1872 stipulates: "Agreement to do impossible act: An agreement to do an act impossible in itself is void. 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. The first paragraph of section 56 represents the same law as in England. Outbreak of wear, war restrictions legally to trade enemy. void contract. 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. As per Section 56 , an agreement to do an impossible act is itself void. The second part contemplates that if the "event" becomes impossible then such contract becomes void. 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. The determination of the degree of change in the obligation must be done by looking into the construction of the contract in the light of facts existing at the time of its formation. Section 56, of the contract act, deals with the impossibility of performance. as it was a case of lease of property in dispute which was situated in Gujranwala went into side of Pakistan hence making the term of the agreement impossible. Held: The court dismissed the defendant’s suit stating that the ‘’impossibility’’ under Section 56( Agreement to do impossible act) doesn’t mean in the physical or literal context. (1954) S. C. 44 and Alopi Prasad vs Union of India A.R. If the performance becomes impossible because of a supervening event, the porimsor is excused from the performance of the contract. This view was upheld by Supreme Court in Satyabrata Ghose vs Mugneeram Bangur A.I.R. Role Of UNHCR In Protection Of Refugee And Other Displaced Person? 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. – 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. CTRL + SPACE for auto-complete. 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. Another important aspect to check for the application of impossibility is that the foundation of the contract gets upset. "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. The doctrine of frustration has been envisaged in Chapter IV in Section 562 of the Contract Act. non performance. In satyabrata v/s mugneeram ( AIR  1954 S.C 44 ) the supreme court have observed that various theories have been propounded regarding the juridical basis of the doctrine of frustration yet the essential idea upon which the doctrine is based on that of the impossibility of performance and frustration are often interchangeable expression also meaning of the term impossible was explained under section 56. The concept of frustration of contract is principally based on impossibility of performance of the contract. 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”. Section 56 covers only ‘supervening impossibility and not implied terms’. This principal has been upheld in Satyabrata Ghose’s case (supra), Inder Pershad versus Campbell7 and other judgement of English Courts. Happening of event which rendered the contract impossible to performance but would not include hard and difficult case of abnormal rise or fair. © Conventus Law 2020 All Rights Reserved.  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’. 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 Act, declared such contract as void. Indeed, since the very aspect of a contract getting frustrated may not be anticipated by the parties whilst executing the contract. 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 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 A thorough explanation of the section can be sought from the celebrated and seminal decision of Satyabrataghose v/s MugneeramBangur and Co. 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. It say that any act which was to performed other the contract was made become impossible or unlawful to perform. When risk is inherent to contract frustration is self indicted the contract is an executed contract the contract can still be performed or the foundation of the contract is not substantially destroyed are example of factors that would  not attract provision of section 56. Interested to publish an article at Law Corner?  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. Such impossibility usually arises due to facts that the promisor had no reason to anticipate and did not contribute to the occurrence of. 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. It is of two types; 1. Unlike cancellation of contract, the frustration of contract not determined at the volition of the party. But section 56 only deals with case of subsequent impossibility as opposed to case of initial impossibility. However, impossibility to perform arising subsequently to the agreement will not, as a rule, relieve the promisor from performing his part in all cases. 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.  In India, since Section 56 of the Contract Act, itself, embodies the doctrine of frustration, the controversy is fairly narrow. The Supreme Court, while applying the doctrine, held that the requisitioning of the area had not substantially prevented the performance of the contract as a whole and therefore, the contract had not become impossible within the meaning of section 56. This is called “Doctrine or Supervening Impossibility”. Impossibility existing at the time of contract. ‘Impossibility’ referred therein includes practical impossibility which goes to the root of contract or affects the object or purpose of the contract, i.e. Job Post: Assistant Manager [Legal] @ RHFL, Chennai: Apply Now.  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. 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. Section 56 [2] is dealt with when matter is not determined to the intention of parties. We hold, therefore, that 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 of the Indian Contract Act. In satyabrata v/s mugneeram ( AIR  1954 S.C 44 ). unlawful becomes void when the act becomes impassible or … Events which make the performance of the contract impossible subsequent to the formation of the contract known as a supervening or subsequent impossibility. An illustration of inherent impossibility of provided therein as A agrees with B to discover treasure by magic. Impossibility of Performance in Traditional Contracts: By Frustration/ Agreement to do impossible Act: Section 56 contemplates various circumstances under which agreement may be void, since it is impossible to carry it out. In that case, it would be impossibility ab initio. For instance, an agreement to discover treasure by magic, because of its impossibility of performance, is void. Click to share on Facebook (Opens in new window), Click to share on WhatsApp (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on Pinterest (Opens in new window), An Interview with Dr. Aneesh V Pillai [Asst. Supervening impossibility or illegality involving action contrary to law or public policy. The parties to such a contract are discharged. Dispute Resolution - Commercial Litigation, Dispute Resolution - International Arbitration. It enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done. Section 56 of the Indian Contract Act lays down: “An agreement to do an impossible act is void”. It was held by the court that Section 56 applies in the present dispute and further observed that the contract can get frustrated by the illegality of the act agreed to be done or by the reason of supervening impossibility. Sec 56 of the Indian Contract Act, 1956, enumerates on the “Doctrine of Frustration” of a contract. If you found any in this website, please report us at [email protected]. If the event becomes impossible, such contracts become void", 7 Inder Pershad versus Campbell; (1881) 7 Cal. Section 65 postulates that when an agreement is discovered to be void, such as in case of a contract getting frustrated, the person who has received any advantage under such agreement is ‘bound’ to restore it or to make compensation for it, from whom he received it. The Indian Contract Act, 1872 in the contract act does not define the term frustration. Subscribe to our newsletter and get all updates to your email inbox! The contract has therefore not been discharged by supervening impossibility. Alternatively, it may supervene. Doctrine of Constructive Notice: Meaning And Characteristics, The Duties of An Advocate Towards His Client. 474. 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 consequence of a contract getting frustrated is that the contract becomes ‘void’. While enunciating the law laid down under section 56, Mukherjee J. explained that the first paragraph of section 56 is on the same lines as of Common Law, which discharges the obligation to perform because of inherent impossibility attached to it. 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. 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. It lays down a positive rule relating to the frustration of contract and does not leave the matter to be determined according to the intention of the parties or the choice of theory to be applied by the court. Physical impossibility is not a prerequisite as already discussed. Under what circumstances the doctrine of Supervening ... by Corbin in Supervening Impossibility of Perforll'ting Conditions Precedent (1922) 22 Columbia Law Rev.  The concept of frustration of contract dates centuries back to the ‘Doctrine of Frustration’ and has, thereafter, evolved in the English Laws. 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". That the impossibility should be by reasons of some event which the promisor could not prevent. 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. ", 4  Taylor v. Caldwell ([1863] EWHC QB J1), 5  Satyabrata Ghose versus Mugneeram Bangur & Co & Anr;(AIR 1954 SC 44), 6  "Contingent contracts to do or not to do anything in an uncertain future event happens, cannot be enforced by law unless and until that event has happened. 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". 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 …  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. Section 56 of ICA 1872 deals with the doctrine of frustration of contract. This article is authored by Navneet Bhardwaj, B.A. However, events such as change in law that leads to illegality or impossibility of performance are situation or intervening circumstances which fundamentally changes the contract, which in our view, lead to contract getting frustrated. Doctrine of Frustration basically enumerates on the impossibility to perform the contract.  In order to establish that a contract is frustrated, the below mentioned conditions are required to be satisfied:. However, the term ‘frustration of contract’, explicitly, is not found in the Contract Act. In the above case the performance of the contract had become physically impossible because of the disappearance of the subject matter. This doctrine is treated as an expectation to the general rule which provides for compensation in case of breach of contract. Supervening impossibility is the impossibility arising after the formation of a contract. It is covered by Section 56 of … The second paragraph has been in fertile source of litigation as the court has deliberated much on the interpretation of the word impossible. 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. 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. 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. 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 … Define Doctrine of supervening impossibility and Explain the effects on the performance of the contract. However, some portion of the area comprised in the scheme was requisitioned for military purposes.  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. Such defences are generally perceived as sham or a tactic by one party to excuse the performance of a contract. “An agreement to do an act impossible in itself is void.”. It is applied when parties did not have an intention regarding the supervening event and when there is no implied term in the contract. 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 Section is reproduced “An agreement to do an act impossible in itself is void”. In this case, the defendant company promised to sell the plaintiff a plot of land after developing by its constructing the roads and drains. Whereas, under Section 56, the parties have not, while entering the contract, considered any such event due to which the contract may become void. Scope and applicability Such agreements are inherently impossible to be performed and therefore, they are void ab initio. 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 doctrine of supervening impossibility/frustration is cherished in the Indian Contract Act. 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 deciding cases in India, the only doctrine that the Courts follow is of supervening impossibility as laid down in section 56, being impossibility in … When frustration occurs, it avoids the contract itself and discharges both parties automatically8. 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