Section 56 of ICA 1872 deals with the doctrine of frustration of contract. The concept of frustration of contract is principally based on impossibility of performance of the contract. Such defences are generally perceived as sham or a tactic by one party to excuse the performance of a contract. This is known as “doctrine of frustration” under the English law and is known as “doctrine of supervening impossibility”. However, this arises at the time when the promisor's performance is due. Section 56 in The Indian Contract Act, 1872. The doctrine of frustration is a doctrine of special case of the discharge of contract by an impossibility to perform it. 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". The contract has therefore not been discharged by supervening impossibility. ‘Impossibility’ referred therein includes practical impossibility which goes to the root of contract or affects the object or purpose of the contract, i.e. Section 56, of the contract act, deals with the impossibility of performance. 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 … It enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done.  The concept of frustration of contract dates centuries back to the ‘Doctrine of Frustration’ and has, thereafter, evolved in the English Laws. 1960 S.C.588. The Section is reproduced “An agreement to do an act impossible in itself is void”. Interested to publish an article at Law Corner? 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. It is applied when parties did not have an intention regarding the supervening event and when there is no implied term in the contract. If a promisor knew or could, with reasonable diligence, have known that the act which he had promised to perform was impossible or unlawful, but the same was not known to the promise, in such a scenario the promisor is liable to make compensation for the loss which the promise may suffer in view of the non‐performance by the promisor. That the impossibility should be by reasons of some event which the promisor could not prevent. 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.  It is also worthwhile to note Section 659 of the Contract Act in the context of the frustration of contract. What would not constitute ground of impossibility: Various decisions which have identified certain situations as not constituting grounds of impossibility – Physical impossibility is not a prerequisite as already discussed. It was observed that the impossibility contemplated by section of the contract is not confined to something which is not humanely possible. 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. 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 Section 56 [2] is dealt with when matter is not determined to the intention of parties. This view was upheld by Supreme Court in Satyabrata Ghose vs Mugneeram Bangur A.I.R. A contract is an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. 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.  In the context of this article we are concerned with the second part of the Section 32 of the Contract Act. It is covered by Section 56 of … 8 The Law of Contract by P C Markanda 2nd Edition 2008; Pg No 893 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. Scope and applicability 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. The parties to such a contract are discharged. Whereas, under Section 56, the parties have not, while entering the contract, considered any such event due to which the contract may become void. Dispute Resolution - Commercial Litigation, Dispute Resolution - International Arbitration. 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. A radical change in the fundamental assumption, on the basis of which contract was entered into, is required to make the performance impracticable, illegal or impossible without the default of either of the parties. 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. 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. Happening of event which rendered the contract impossible to performance but would not include hard and difficult case of abnormal rise or fair. 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. This principal has been upheld in Satyabrata Ghose’s case (supra), Inder Pershad versus Campbell7 and other judgement of English Courts. Sec 56 of the Indian Contract Act, 1956, enumerates on the “Doctrine of Frustration” of a contract. 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. Then such act which become impossible or unlawful to become 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. 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. Job Post: Assistant Manager [Legal] @ RHFL, Chennai: Apply Now. 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 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.  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.  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’. What is Compoundable Offence And Non Compoundable Offence? 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. 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 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". 421, Write CSS OR LESS and hit save. However, impossibility to perform arising subsequently to the agreement will not, as a rule, relieve the promisor from performing his part in all cases. 474. 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. Supervening impossibility is the impossibility arising after the formation of a contract. ", 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. 56. 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  Whilst entering into various commercial documents, parties seldom foresee their contract getting frustrated. 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. 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. 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. An agreement to do an act impossible in itself is void (S.56) Impossibility of performance of an act does not give or creat any obligation upon the parties to a contract. A thorough explanation of the section can be sought from the celebrated and seminal decision of Satyabrataghose v/s MugneeramBangur and Co. 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 doctrine fills the void in a contract regarding supervening events based on principal of fairness and equity. This section states as follow: An agreement to do an act impossible in itself is void. Doctrine of Supervening Impossibility. Destruction of subject matter by five explosive spoilage of dates by water and sewage due to sinking of ship. Agreement to do impossible act.—An agreement to do an act impossible in itself is void. Outbreak of wear, war restrictions legally to trade enemy.  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. 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. Define Doctrine of supervening impossibility and Explain the effects on the performance of the contract. 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. GENESIS OF FRUSTRATION OF CONTRACT. 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. 1 Mr (Retd) Justice B K Mukherjea; Satyabrata Ghose versus Mugneeram Bangur& Co & Anr (AIR 1954 SC 44) 2 "An agreement to do an act impossible in itself is void. 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 … 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.  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. Such agreements are inherently impossible to be performed and therefore, they are void ab initio. Under what circumstances the doctrine of Supervening ... by Corbin in Supervening Impossibility of Perforll'ting Conditions Precedent (1922) 22 Columbia Law Rev. Read PDF Article 61 Supervening Impossibility Of Performance performance of the contract and thereby contract is discharged, (Section 56, Indian Contract Act, 1872).  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". void contract. impossibility of act. This is called “Doctrine or Supervening Impossibility”. While deciding whether or not the contract has been frustrated, the courts objectively look to the construction of the contract, the effect of the changed circumstances on the parties’ contractual obligations, the intentions of the parties and the demands of justice. unlawful becomes void when the act becomes impassible or … Section 56 of the Act, declared such contract as void. (1954) S. C. 44 and Alopi Prasad vs Union of India A.R. 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”. Events which make the performance of the contract impossible subsequent to the formation of the contract known as a supervening or subsequent impossibility. 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. 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. Bar Council of India Shall pay Rs. —An agreement to do an act impossible in itself is void." 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 leads to a pertinent question as to what is such impossible act that would lead to frustration of 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. Indeed, since the very aspect of a contract getting frustrated may not be anticipated by the parties whilst executing the contract. The law governing the contracts is embodied in the Indian Contract Act, 1862 ("Contract Act"). The performance of obligation under a may be hindered by unexpected supervening events leading to contractual uncertainties. It say that any act which was to performed other the contract was made become impossible or unlawful to perform.  The doctrine of frustration qua the Section 56 of the Contract Act has been discussed extensively in the judgement of Supreme Court of India("SC") in the case of Satyabrata Ghose versus Mugneeram Bangur & Co & Anr5 and the same has been since followed in India. This article is authored by Navneet Bhardwaj, B.A. Unlike cancellation of contract, the frustration of contract not determined at the volition of the party. 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. 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. 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 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. "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. LL.B (Hons.) 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. 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". 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. In that case, it would be impossibility ab initio. The doctrine of frustration has been envisaged in Chapter IV in Section 562 of the Contract Act. Section 56 states that an agreement to do an act which becomes impossible or unlawful is void. CTRL + SPACE for auto-complete. In the above case the performance of the contract had become physically impossible because of the disappearance of the subject matter. In satyabrata v/s mugneeram ( AIR  1954 S.C 44 ). 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. Doctrine of Frustration basically enumerates on the impossibility to perform the contract. Impossibility existing at the time of contract. 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. What is Restraining Order And How to Get A Restraining Order in India? Section 56 covers only ‘supervening impossibility and not implied terms’. but it is principal is not confined to physical impossibly. 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 … 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.  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. Section 56 of the Indian Contract Act lays down: “An agreement to do an impossible act is void”. 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. 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. A frustration of contract is a contract that subsequent to its formation and without fault of either party is incapable of being performed due to an enforcement event. 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. It is of two types; 1. The first paragraph of section 56 represents the same law as in England. Mukherjee J. further state while referring to the second paragraph to section 56. 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. non performance. 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).  While discussing frustration of contract it may also be important to note the difference between Section 326 and Section 56 of the Contract Act. Role Of UNHCR In Protection Of Refugee And Other Displaced Person? Doctrine of Constructive Notice: Meaning And Characteristics, The Duties of An Advocate Towards His Client. 5000/- Stipend to New... What is Article 370? 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 … It basically means, a contract could not be executed because of such an event that was beyond the control of both the parties. If you found any in this website, please report us at info@lawcorner.in. 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. “An agreement to do an act impossible in itself is void.”. Another important aspect to check for the application of impossibility is that the foundation of the contract gets upset. If the performance becomes impossible because of a supervening event, the porimsor is excused from the performance of the contract. 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.  The doctrine of frustration was initially, in English laws, based on the notion of ‘implied contract’ i.e. 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. Prof. Law…, An Interview with Dr. Ankit Awasthi [Asst. Section 56 of the Act is applicable when it becomes impossible to perform due to some supervening circumstances or events.  In India, since Section 56 of the Contract Act, itself, embodies the doctrine of frustration, the controversy is fairly narrow. However, some portion of the area comprised in the scheme was requisitioned for military purposes. 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. For instance, an agreement to discover treasure by magic, because of its impossibility of performance, is void. Click Here to submit your article. 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. – 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. When frustration occurs, it avoids the contract itself and discharges both parties automatically8. Alternatively, it may supervene. The company attempted to rescind the contract on the ground of supervening impossibility.  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. Further, on account of such impossibility, the whole contract becomes void when the act becomes impossible or unlawful.  In order to establish that a contract is frustrated, the below mentioned conditions are required to be satisfied:. This doctrine is treated as an expectation to the general rule which provides for compensation in case of breach of contract. An illustration of inherent impossibility of provided therein as A agrees with B to discover treasure by magic.  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 second part contemplates that if the "event" becomes impossible then such contract becomes void.  The consequence of a contract getting frustrated is that the contract becomes ‘void’. But section 56 only deals with case of subsequent impossibility as opposed to case of initial impossibility. Authored by Navneet Bhardwaj, B.A  in Order to establish that a.... 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