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". Define Doctrine of supervening impossibility and Explain the effects on the performance of the 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. Bar Council of India Shall pay Rs. The second paragraph has the effect of turning into general rule, the limited exceptions under the English Law. 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. 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. 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. Section 56 of ICA 1872 deals with the doctrine of frustration of contract. 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 supervening impossibility/frustration is cherished in the Indian Contract Act. 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 performance of obligation under a may be hindered by unexpected supervening events leading to contractual uncertainties. 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. Subscribe to our newsletter and get all updates to your email inbox! 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 ", 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.  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. But section 56 only deals with case of subsequent impossibility as opposed to case of initial impossibility. In satyabrata v/s mugneeram ( AIR  1954 S.C 44 ). 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. – 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. 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. Doctrine of Frustration basically enumerates on the impossibility to perform the contract.  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. Agreement to do impossible act.—An agreement to do an act impossible in itself is void.  The doctrine of frustration was initially, in English laws, based on the notion of ‘implied contract’ i.e. ‘Impossibility’ referred therein includes practical impossibility which goes to the root of contract or affects the object or purpose of the contract, i.e. 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. 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. Section 56 of the Indian Contract Act lays down: “An agreement to do an impossible act is void”.  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’. We try our level best to avoid any misinformation or abusive content. 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. In the above case the performance of the contract had become physically impossible because of the disappearance of the subject matter. Such defences are generally perceived as sham or a tactic by one party to excuse the performance of a contract. Section 56 [2] is dealt with when matter is not determined to the intention of parties. Such impossibility usually arises due to facts that the promisor had no reason to anticipate and did not contribute to the occurrence of. 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 … The Section is reproduced “An agreement to do an act impossible in itself is void”. 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. Further, on account of such impossibility, the whole contract becomes void when the act becomes impossible or unlawful. 1960 S.C.588. 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. 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. Dispute Resolution - Commercial Litigation, Dispute Resolution - International Arbitration. 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. That the impossibility should be by reasons of some event which the promisor could not prevent. This section states as follow: An agreement to do an act impossible in itself is void. Interested to publish an article at Law Corner? 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. 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. but it is principal is not confined to physical impossibly. (1954) S. C. 44 and Alopi Prasad vs Union of India A.R. non performance. Doctrine of Supervening Impossibility. 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. 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. GENESIS OF FRUSTRATION OF CONTRACT. 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". Read PDF Article 61 Supervening Impossibility Of Performance performance of the contract and thereby contract is discharged, (Section 56, Indian Contract Act, 1872). Job Post: Assistant Manager [Legal] @ RHFL, Chennai: Apply Now. void contract. 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. “An agreement to do an act impossible in itself is void.”. 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. Supervening impossibility is the impossibility arising after the formation of a contract. The second part contemplates that if the "event" becomes impossible then such contract becomes void. What is Compoundable Offence And Non Compoundable Offence? Section 56 of the Act is applicable when it becomes impossible to perform due to some supervening circumstances or events. The doctrine fills the void in a contract regarding supervening events based on principal of fairness and equity. 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. Section 56 in The Indian Contract Act, 1872. —An agreement to do an act impossible in itself is void." 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. However, some portion of the area comprised in the scheme was requisitioned for military purposes. © Conventus Law 2020 All Rights Reserved. The contract has therefore not been discharged by supervening impossibility. Also in Susila Devi v/s Hari Singh.  In order to establish that a contract is frustrated, the below mentioned conditions are required to be satisfied:. 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. 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. Under what circumstances the doctrine of Supervening ... by Corbin in Supervening Impossibility of Perforll'ting Conditions Precedent (1922) 22 Columbia Law Rev. 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. However, this arises at the time when the promisor's performance is due. 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. The company attempted to rescind the contract on the ground of supervening impossibility. 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. Section 56 states that an agreement to do an act which becomes impossible or unlawful is void. The doctrine of frustration has been envisaged in Chapter IV in Section 562 of the Contract Act. 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. It say that any act which was to performed other the contract was made become impossible or unlawful to perform. Events which make the performance of the contract impossible subsequent to the formation of the contract known as a supervening or subsequent impossibility. 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. Then such act which become impossible or unlawful to become void. 421, Indeed, since the very aspect of a contract getting frustrated may not be anticipated by the parties whilst executing the contract.  The concept of frustration of contract dates centuries back to the ‘Doctrine of Frustration’ and has, thereafter, evolved in the English Laws.  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". This article is authored by Navneet Bhardwaj, B.A. Write CSS OR LESS and hit save. Outbreak of wear, war restrictions legally to trade enemy. This is called “Doctrine or Supervening Impossibility”. In this case, the defendant company promised to sell the plaintiff a plot of land after developing by its constructing the roads and drains. Role Of UNHCR In Protection Of Refugee And Other Displaced Person?  While discussing frustration of contract it may also be important to note the difference between Section 326 and Section 56 of the Contract Act. 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. As per Section 56 , an agreement to do an impossible act is itself void. The first paragraph of section 56 represents the same law as in England.  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. This view was upheld by Supreme Court in Satyabrata Ghose vs Mugneeram Bangur A.I.R. It enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done. 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 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. Section 56 covers only ‘supervening impossibility and not implied terms’. This is known as “doctrine of frustration” under the English law and is known as “doctrine of supervening impossibility”. What is Restraining Order And How to Get A Restraining Order in India? 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 … 8 The Law of Contract by P C Markanda 2nd Edition 2008; Pg No 893 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. 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. Physical impossibility is not a prerequisite as already discussed. 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. 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. 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. Click Here to submit your article. 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. Section 56, of the contract act, deals with the impossibility of performance. 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.  It is also worthwhile to note Section 659 of the Contract Act in the context of the frustration of contract. If the performance becomes impossible because of a supervening event, the porimsor is excused from the performance of 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. The doctrine of frustration is a doctrine of special case of the discharge of contract by an impossibility to perform it. In simple words, on the happening of an event which makes the contract impossible or unlawful, the contract stands determined and discharged. Scope and applicability It basically means, a contract could not be executed because of such an event that was beyond the control of both the parties.  Whilst entering into various commercial documents, parties seldom foresee their contract getting frustrated. 56. The law governing the contracts is embodied in the Indian Contract Act, 1862 ("Contract Act"). The Indian Contract Act, 1872 in the contract act does not define the term frustration. It is of two types; 1. The second paragraph has been in fertile source of litigation as the court has deliberated much on the interpretation of the word impossible. What would not constitute ground of impossibility: Various decisions which have identified certain situations as not constituting grounds of impossibility – 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 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. 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. impossibility of act. The concept of frustration of contract is principally based on impossibility of performance of the contract. If the event becomes impossible, such contracts become void", 7 Inder Pershad versus Campbell; (1881) 7 Cal. It is applied when parties did not have an intention regarding the supervening event and when there is no implied term in the contract. 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. LL.B (Hons.) unlawful becomes void when the act becomes impassible or … "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. 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. Another important aspect to check for the application of impossibility is that the foundation of the contract gets upset. 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. Doctrine of Constructive Notice: Meaning And Characteristics, The Duties of An Advocate Towards His Client.  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. Of provided therein as a supervening event, the contract act does not define the term frustration contract an... Therein as a supervening or subsequent impossibility as opposed to case of abnormal rise or fair ” the! Its impossibility of provided therein as a supervening or subsequent impossibility, this at. 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