Effects of Doctrine of Frustration

What is a Contract?

Indian Contract Act, 1872 is a central law, and it validates the contracts or agreements between various parties. Contract Act regulates and oversees all the business in case of any deal or an agreement. An agreement involving legal enforceability is said to be a contract. It specifies the responsibilities of the parties concerned. In every contract, the offeror makes an offer to enter into a contract with the offeree. Hence, a contract is anything that is an agreement and enforceable by the law of the land subject to the presence of all the essential elements to form a valid contract....

Evolution of Doctrine of Frustration

The established rule of contracts provides that the parties in a contract must fulfill their part of obligations as per the contract. In any event of a breach, the party who is responsible for breaching the contract must compensate the aggrieved party for the damages caused to him....

Doctrine of Frustration

The term “Frustration of Contract” is not specifically defined in the Indian Contract Act, 1872. However, Section 56 of the Indian Contract Act also governs the agreement to perform impossible acts in India. This doctrine allows the court to void a promisor’s promise to perform an act that is impossible to perform. The entire contract will be rendered void when an act becomes impossible or unlawful to perform due to unforeseen circumstances that are beyond the control of the parties....

Applicability of Section 56

Section 56 of the Indian Contract Act, 1872 plays a crucial role in the application of the Doctrine of Frustration. Section 56 states that agreements to do impossible acts will be considered void, and agreements will also be considered void when the contract becomes impossible or unlawful due to uncontrollable events....

Conditions Required to Establish Doctrine of Frustration

To establish the Doctrine of Frustration, the following conditions must be present in a contract:...

Grounds for Doctrine of Frustration

1. Impossibility of Performance: The doctrine is triggered when the performance of a contract becomes impossible. This not only includes physical impossibility but also includes situations where the performance becomes impracticable, and the subject matter of the contract is disrupted....

Effects of Doctrine of Frustration

When the Doctrine of Frustration comes into play, and the performance is disrupted there can be the following effects:...

Conclusion

The general rule of contract provides that the parties in a contract must fulfill their part of obligations as per the contract. In any event of a breach, the party who is responsible for breaching the contract must compensate the aggrieved party. The Doctrine of Frustration is an exception to the general rule and discusses the impossibility of the performance of the contract. The doctrine states that the contract could not be performed by either of the parties for a reason that is beyond the limits of control and when the contract’s performance becomes a supervening impossibility the performance of such a contract becomes frustrated or it becomes impossible, complicated, or illegal. Frustration in a contract can arise due to any unforeseen, impossible events and events out of control of the parties to the contract. The doctrine was introduced earlier the provisions regarding impossible contracts were very rigid. The doctrine is based on section 56 of the Indian Contract Act and also discusses the effects and grounds of the doctrine....

Frequently Asked Questions (FAQs)

1. What is a Contract?...