DOCTRINE OF FRUSTRATION: WHEN A CONTRACT BECOMES IMPOSSIBLE TO PERFORM

INTRODUCTION

The doctrine of frustration is also known as the doctrine of supervening impossibility. In this doctrine, a party makes a contract for a certain purpose in mind; however, when the contract becomes impossible, the purpose for which the party is mind is frustrated, and the other party is excused from performing a contract.

This doctrine is only relevant for those situations involving natural disasters, government actions, or destruction of subject matter. In India, this doctrine is given in section 56 of the Indian Contract Act, of 1872.  Which clearly states that the contract becomes void or impossible to perform due to unlawful circumstances or beyond the control of both parties.

LEGAL BASIS OF THE DOCTRINE OF FRUSTRATION

1. Section 56 of the Indian Contract Act of 1872.

The doctrine of frustration is of two types, which are given in section 56, which states that;

• Initial impossibility: The impossibility which exists at the time of making the contract is known as initial impossibility. In case of initial impossibility, the contract can never be performed so it becomes void.
• For example: A promises to sell his horse to B on 08/03/2025. Unknown to both parties, the horse is dead at the time of contract. This is the case of initial impossibility.
• Subsequent impossibility: In the subsequent impossibility, sometimes the contract becomes void or impossible when it was made, but due to some subsequent event, the performance becomes impossible, this is known as subsequent impossibility, due to subsequent impossibility, the contract becomes void.
• For example: On 08/03/2025, A promised to sell his car to B for Rs 1 Lakh. The car is to be delivered on 09/04/2025. But on 27/03/2025 the car was stolen. Now A can’t deliver his car to B on 9/04/2025. This is known as a subsequent impossibility. Now the contract becomes void.

2. English law and common law doctrine

The English law evolved the strict principle of absolute contracts, where the parties are bound to perform their obligations.

The landmark judgement TAYLOR V. CALDWELL [1863]

In this case, A agreed with B to give him a music hall and garden rent for holding a concert [program] and B agreed to pay rent. Before the date of the performance [concert] arrived, the music hall was destroyed by fire. B sued A for breach of contract.

Court held that the contract became void under the doctrine of frustration and A was excused that is he was not liable for the breach of contract.

ESSENTIAL ELEMENTS OF DOCTRINE OF FRUSTRATION

1. EXISTENCE OF A VALID CONTRACT- A valid contract exists when there are two or more parties in a legally enforceable obligation. The key elements involved in a valid contract are offer, acceptance, consideration, capacity, legality, and free consent.

2. UNFORESEEN EVENTS BEYOND THE CONTROL OF THE PARTIES –The unforeseen events must be unexpected, and it is out of the control of both parties and not due to their fault.
3. THE FRUSTRATING EVENT MUST OCCUR WITHOUT ANY FAULT OF EITHER PARTY

If one party is responsible for the event, frustration does not apply and the liability may arise for breach of contract.

WHEN DOES THE DOCTRINE OF FRUSTRATION APPLY?

1. Destruction of subject matter
2. Changing in law, rendering performance unlawful
3. Death or incapacity in personal service contract.

WHEN WILL THE DOCTRINE OF FRUSTRATION NOT APPLY?

1. Temporary difficulties or delays
2. Hardship or increased cost
3. Self-induced frustration
4. Completed transfers or executed contacts
5. Failure of one of the objects
6. Act of the third party

LANDMARK CASES OR JUDICIAL INTERPRETATIONS

1. Case- Taylor V. Caldwell [1863]

In this case, A agreed with B to give him a music hall and garden rent for holding a concert [program] and B agreed to pay rent. Before the date of the performance [concert] arrived, the music hall was destroyed by fire. B sued A for breach of contract.

The court held that the contract became void under the doctrine of frustration, and A was excused, that is, he was not liable for the breach of contract.

2. Case- Krell V. Henry [1903]

In this case, a flat was hired to view the coronation procession, but the procession was cancelled due to the king’s illness. Thus, the contract became impossible.

3. Satyabrat Ghose V. Mugneeram Bangur & Co. [1954]

In this case, the Supreme Court of India ruled that impossibility does not mean literal impossibility but includes the situation where performance becomes impractical due to unforeseen changes in circumstances. The court held that frustration is a matter of law not fact and must be determined based on the contract’s nature and the impact of the event.

CONCLUSION

The doctrine of frustration is a principle ensures that fairness in contract law when there are unforeseen events that make the performance impossible. It prevents one party from being unjustly burdened by circumstances beyond their control while maintaining integrity.