 It is also worthwhile to note Section 659 of the Contract Act in the context of the frustration of contract. Section 56 of the Act, declared such contract as 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 concept of frustration of contract is principally based on impossibility of performance of the contract. 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. In simple words, on the happening of an event which makes the contract impossible or unlawful, the contract stands determined and discharged. However, impossibility to perform arising subsequently to the agreement will not, as a rule, relieve the promisor from performing his part in all cases. 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. Further, on account of such impossibility, the whole contract becomes void when the act becomes impossible or unlawful.  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". Then such act which become impossible or unlawful to become void. The doctrine of frustration is an aspect and 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, 1872. 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. However, the term ‘frustration of contract’, explicitly, is not found in the Contract Act. non performance. What would not constitute ground of impossibility: Various decisions which have identified certain situations as not constituting grounds of impossibility – 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. We try our level best to avoid any misinformation or abusive content. 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. If you found any in this website, please report us at info@lawcorner.in. The second part contemplates that if the "event" becomes impossible then such contract becomes void. This is called “Doctrine or Supervening Impossibility”.  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.  In India, since Section 56 of the Contract Act, itself, embodies the doctrine of frustration, the controversy is fairly narrow. 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. 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". 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). 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. The aspect of discharge of contract has to, therefore, be analysed within the contours of Section 56 of the Contract Act. —An agreement to do an act impossible in itself is void." Sec 56 of the Indian Contract Act, 1956, enumerates on the “Doctrine of Frustration” of a contract. 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. In that case, it would be impossibility ab initio. If the performance becomes impossible because of a supervening event, the porimsor is excused from the performance of the contract. 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. 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. A contract is an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. Such impossibility usually arises due to facts that the promisor had no reason to anticipate and did not contribute to the occurrence of. 8 The Law of Contract by P C Markanda 2nd Edition 2008; Pg No 893 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. Dispute Resolution - Commercial Litigation, Dispute Resolution - International Arbitration. unlawful becomes void when the act becomes impassible or … It leads to a pertinent question as to what is such impossible act that would lead to frustration of contract. 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. That the impossibility should be by reasons of some event which the promisor could not prevent. An illustration of inherent impossibility of provided therein as A agrees with B to discover treasure by magic.  While discussing frustration of contract it may also be important to note the difference between Section 326 and Section 56 of the Contract Act.  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. The company attempted to rescind the contract on the ground of supervening impossibility. 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 … Subscribe to our newsletter and get all updates to your email inbox! 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. 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. 56. 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. 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. Alternatively, it may supervene. 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. 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. 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. Under what circumstances the doctrine of Supervening ... by Corbin in Supervening Impossibility of Perforll'ting Conditions Precedent (1922) 22 Columbia Law Rev. Unlike cancellation of contract, the frustration of contract not determined at the volition of the party. 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. LL.B (Hons.) Section 56 of the Indian Contract Act lays down: “An agreement to do an impossible act is void”. This view was upheld by Supreme Court in Satyabrata Ghose vs Mugneeram Bangur A.I.R. 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. 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. 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