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Doctrine Of Frustration Of Contract: A Comparative Analysis Under Section 56 Of The Indian Contract Act

This paper thoroughly explores the doctrine of frustration in contract law. The doctrine, which originated from Roman law and evolved into English law, allows parties to void agreements when performance becomes impossible or unlawful due to unforeseeable events beyond their control. In India, the doctrine is enshrined in Section 56 of the Contract Act and has been clarified through cases such as Satyabrata Ghosh v. Mugneeram Bangur & Co. The paper examines the historical development of the doctrine, its practical significance in contemporary legal frameworks, and its impact on business transactions and legal remedies. It also highlights exceptions to the doctrine of frustration, drawing on recent legal precedents such as Kerala High Court rulings.

The paper discusses the implications of frustration for businesses, individuals, and legal practitioners. It emphasizes the importance of risk management considerations for businesses, such as assessing potential risks and incorporating appropriate contract clauses to mitigate losses. Additionally, it stresses the importance of effective communication and mitigation efforts in addressing the impact of frustration on business relationships and reputations. In conclusion, this paper comprehensively explains frustration's role in navigating complex business transactions and legal disputes. Legal practitioners, scholars, and businesses can benefit from the insights presented in this thorough exploration of frustration in contract law.

Research Methodology
This study employs a systematic approach to gather and analyze information from online sources to address the research questions posed. The methodology encompasses several key stages, including identifying the research topic, formulating the search strategy, source evaluation, data collection, analysis, synthesis, and interpretation.

In the contemporary era of Contract law, agreements are a fundamental aspect of establishing commercial or legal relationships. However, the doctrine of frustration serves as a crucial protection against unforeseen circumstances that could make fulfilling contractual obligations impossible. Frustration in the contract occurs when unanticipated events beyond the parties' control disrupt the basis upon which the agreement was formed, making it impractical, unlawful, or fundamentally different from its original purpose.

As a general rule, parties to a contract have an intention towards the fulfillment of their part. In case of breach, the party breaching is liable to compensate for the same, but an exception to this rule is laid down in sec 56[1] of the Indian Contract Act 1872. In agreements and contracts, "frustration" refers to a scenario where a deal cannot be completed due to unforeseen events. It is a way to deal with unsuccessful transactions. When contract law is involved, the doctrine of Frustration is often used to manage failed contracts, which is one of the most common issues in this area.

Understanding the complexities of the frustration of contracts is crucial in navigating modern business transactions. Unexpected events such as natural disasters and legislative changes can impact the feasibility of contractual performance. This paper comprehensively explores the doctrine of frustration, including its historical development, legal framework, requirements, types, consequences, limitations, and practical implications. By examining fundamental case studies and anticipating future trends and challenges, this research aims to shed light on the nuanced landscape of frustration of contract. The insights offered in this paper are invaluable to legal practitioners, scholars, and businesses alike.

Historical Development
In contract law, the doctrine of frustration deals with situations where an agreement becomes impossible or impractical to fulfill due to unforeseen circumstances. The concept evolved in English law, where it is recognized as part of the frustration doctrine, while American law refers to this as the theory of impossibility and impracticability. However, in the Indian legal system, it is codified under section 56[2] of the Indian Contract Act, 1872.

The term "frustration" essentially means defeat or inability to proceed. According to the Black Law Dictionary, frustration refers to preventing or hindering the achievements of a specific objective, particularly in the context of contractual performance[3]. Indian courts have emphasized that the term frustration of the contract is more precisely described as the frustration of adventure or the business or practical objective of the contract[4]. This concept serves as a mechanism to balance the general rule of absolute contract with the specific Exception that Fairness is demanded under certain conditions[5].

Fundamentally, this doctrine revolves around the impossibility of performing a contract by involved parties. It signifies that the contract becomes inexecutable due to incidents beyond the control of the contracting parties. This frustration can manifest in various forms, making the performance complicated, impossible, or illegal. It is triggered by unforeseen or uncontrollable events that render the contractual obligations practical; the doctrine of frustration provides a legal framework to address situations where external factors make it unfeasible for parties to fulfill their contractual commitments.

The doctrine of frustration of contract originated from Roman law, which was first mentioned in the case of Paradine v. Jane[6]. In this case, the parties were discharged because the thing had been destroyed or the purpose of the contract had become impossible to perform. Analyzing the case facts, Jane was sued for rent by Party, and the defendant argued that a German prince had taken the area where the property was situated. Therefore, he could not use the property to make any profits. He had planned to give the rent out from this property where he would make a profit by using it. However, the defendant's defense was not held liable because the obligations under the contract were absolute, with no exceptions whatsoever.

Here, the judge held that responsibility under the agreement should be owned under all circumstances. Another critical case in which this trace originated is the case of a queen bench judgment, Taylor vs Caldwell,[7] in England. The doctrine of frustration has evolved as a response to the abovementioned doctrine. There were so many instances where the contract was impossible to perform through no fault of the defendant, and the strictness of the English lovers was found to be unhelpful and unjust. Hence, an exception to this rule was required. Therefore, it incorporated the doctrine of frustration in the contract to remedy the impossible circumstances.

Doctrine of Frustration under Indian Contract Act

The Indian Contract Act of 1872[8] Does not explicitly mention the term "frustration of contract" or define it. However, Section 56[9] the Act, which governs agreements to perform impossible acts in India, is relevant to this doctrine. According to this section, if a contract to carry out an impractical act is voided by law in India, a quote of law can void a promise or promise. If an action taken after a contract has been established becomes impossible or if one party fails to fulfill their obligations due to unforeseen circumstances, the contract is frustrated. This section specifies that an agreement due to impossibility is void in and of itself. Moreover, when a contract to perform an act is rendered impossible or unlawful due to an event beyond the control of the promiser, the entire contract is rendered void. This situation is known as a frustration with the `contract.

To clarify the concept, let's consider a scenario where two parties, A and P, have a contract under which A is to receive cargo at a foreign port. However, if A's government declares war on the nation where the port is located, the contract's performance is impeded by unforeseen events, leading to frustration with the contract.

In India, the doctrine of frustration was developed in the context of Indian laws in the landmark case of Satyabrata Ghosh vs. Mungir Ram Mango and Corporation[10] Justice Mukherjee stated that the first paragraph of Section 56[11] is akin to common law principles in that the responsibility to comply is charged due to inherent impossibility. In another case, Syed Kurishid Ali vs. the State of Orisa[12], the doctrine of frustration was defined as an event of subsequent unenforceable incidents for which neither party is accountable, and it indirectly specifies the frustration of contract.

Practical Implication
The Doctrine of frustration of contract carries significant practical implications for businesses, individuals, and legal practitioners. If we're talking about businesses, there's a risk management factor. In this factor, the frustration with the contract introduces a level of uncertainty to business transactions. Companies need to assess the potential risk of unforeseen events that could lead to When a contract is frustrated; businesses may suffer financial losses due to the inability to fulfill obligations or the loss of anticipated benefits.

Understanding the legal remedies available, such as restitution or compensation, is crucial for businesses to mitigate these losses. Frustration should be considered, and the contract should include appropriate clauses to mitigate these risks. Frustration of contracts can impact business relationships and reputation. How a company handles a frustrated contract, including communication with the other party and efforts to minimize disruption, can influence its reputation within the industry. Where a contract is frustrated, it is considered terminating.

This means the parties are no longer obligated to perform their obligations under the contract. Frustration of contract shifts the risk of laws from parties to the contract to the party who peers the lowest resulting from the frustration. This could mean that one party may have to bear certain costs incurred before the frustration occurred. If payments have already been made under the contract, the doctrine of frustration may allow for recovery of those payments, depending on the circumstances and the jurisdiction laws[13]. Frustration excuses both parties from performing their application under the contract. This can have significant implications for ongoing projects or transactions.

Example of the practicality of frustration- The ongoing conflict between Russia and Ukraine could potentially lead to frustration of contracts in certain situations, depending on the nature of the contract and specific circumstances. Suppose conflict directly impacts the ability of parties to perform their contractual obligation, such as disrupting supply chains, damaging infrastructure, and causing political instability. In that case, it may render the contract impossible to perform.

If the conflict results in sanctions, trade restrictions, or other legal barriers that make it illegal or impractical to fulfill the contract, it will lead to frustration. For example, if the country fled to sections prohibiting the export or import of certain goods, contracts may be frustrating. If the subject matter of the contract is destroyed, damaged, or rendered on the massive vehicle as a result of conflict, the contract may be frustrated.

For instance, if a contract involves rear estate or infrastructure in a conflict zone that is destroyed during the war, the contract may be frustrating. The. The conflict may fundamentally alter the contract's circumstances, making it radically different from what the party initially intended. These change circumstances could lead to frustration if it makes the performance of the cottage commercially or practically impossible, as we have seen various properties.

Lands were destroyed due to the attack made by Russia in Ukraine, and those properties were involved in any contract. This situation led to frustration because the contract was a waste due to the destruction of the complete subject matter. So, it is essential to note that whether a contract is frustrated due to the Russia and Ukraine conflict will depend on each case's specific facts and circumstances, the governing law, and any relevant contractual provisions. Parties affected by conflict should carefully review their contract; this whole day, there are two various deaths, which also makes them incapable of making a contract for those parties who were already involved in any contractual relationship before their deaths.

Exceptions of this Doctrine:
  1. No frustration of contract due to mere commercial hardship caused by pandemic held by Kerala High Court, Suneesh K S V Travancore Devaswom Board & Ors [14]:
    The Kerala High Court has recently ruled that occurrence of a commercial difficulty or hardship to perform a contract is not an excuse to back out from contractual obligations, which the party's had agreed to in the first place. Referring to the precedent in Sureshan Nair TS, V Travancore Deva Swamp Board, the court ruled that once an individual accepts a grant of Kuthaka, the right to sell designated products, and remits the first installment; they are bound to adhere to all conditions in the tender notification and execute the agreement within the stipulated time.

    Failure to do so forfeits the right to avoid contractual occupations and claim benefits. They highlighted that clause 12 of the tender agreement empowers the board to recover losses from the petitioner's movable and immovable properties due to default payment, emphasizing the importance of ordering contractual commitment despite any challenges forced by the pandemic[15].
  2. The Doctrine of Frustration Has Narrow Limits-In an instructive English judgment. Namely, Tsakiroglou & Co. Ltd. v. Noblee Thorl GmbH[16], despite the closure of the Suez Canal, and even though the customary route for shipping the goods was only through the Suez Canal, it was held that the contract of sale of groundnuts, in that case, was not frustrated, even though it would have to be performed by an alternative mode of performance which was much more expensive, namely, that the ship would now have to go around the Cape of Good Hope, which is three times the distance from Hamburg to Port Sudan. The freight for such a journey was also double.

    Despite this, the House of Lords held that even though the contract had become more onerous to perform, it was not fundamentally altered. Where performance is otherwise possible, it is clear that a mere rise in freight price would not allow one of the parties to say that the impossibility of performance discharged the contract[17]

The doctrine of frustration of contract, which is described in the Indian Contract Act and is interpreted through case law, serves as a crucial safeguard in modern commerce against the impact of unforeseen events. This paper has examined its historical development, legal framework, and practical implications, providing insights into its nuanced application in business transactions. Through examples such as the conflict between Russia and Ukraine and recent rulings by the Kerala High Court, we have seen how frustration can significantly impact contractual relationships and legal remedies.

Key business considerations include effective risk management strategies and upholding contractual commitments despite challenges. While frustration provides relief in exceptional circumstances, its narrow limits, as illustrated by legal precedents, emphasize the principle of honoring contractual obligations. By offering insights into frustration's role in navigating complex business transactions and legal disputes, this paper is a valuable resource for legal practitioners, scholars, and businesses. As commerce continues to evolve in an increasingly unpredictable world, understanding the intricacies of the frustration of contract remains essential for ensuring fair and equitable outcomes in contractual relationships.

  1. The Indian Contract Act of 1872, � 56 No. 9, Acts of Parliament, 1872 (India).
  2. The Indian Contract Act of 1872, � 56 No. 9, Acts of Parliament, 1872 (India).
  3. Black's Law Dictionary 21st ed. (2021),
  4. Ram Kumar v PC Roy and Co Ltd A.I.R. 1952 Cal 335 [23]; Andhra Pradesh Mineral Development Corporation Ltd v Pottem Brothers 2016 (3) ALT 297 [69].
  5. HirjiMulji v Cheong Yue Steamship [1926] A O 497, 510 (Lord Sumner), Affd Nirmal Lifestyle Ltd v Tulip Hospitality Services Ltd, Arbitration Petition No 550, 864 and 891 of 2013 [14] (Bombay High Court, 27 November 2013).
  6. Paradine v. Jane, 82 Eng Rep. 897 (1647).
  7. Taylor vs. Caldwell, [1863] 3 B&S 826.
  8. The Indian Contract Act of 1872, Act No. 9 of 1872, India Code (as amended).
  9. The Indian Contract Act of 1872, � 56 No. 9, Acts of Parliament, 1872 (India).
  10. Satyabrata Ghose v. Mugneeram Bangur & Co. AIR 1954 SC 44.
  11. The Indian Contract Act of 1872, � 56 No. 9, Acts of Parliament, 1872 (India).
  12. Syed Kurishid Ali v the State of Orisa, AIR 2007 ORISSA 56.
  13. LEXOLOGY.COM, (last visited Mar. 20, 2024).
  14. Suneesh K S v Travancore Devaswom Board & Ors, WP(C) NO. 19896 OF 2021.
  15. Hannah M Varghese, No Frustration Of Contract Due To Mere Commercial Hardships Caused By Pandemic: Kerala High Court, LIVE LAW (Mar. 22, 2024, 2:28 PM),
  16. Tsakiroglou & Co. Ltd. v Noblee Thorl GmbH [1961] 2 WLR 633: 1961 (2) All ER 179.
  17. Prashanth Shivadass & Priyanka Yavagal, Force Majeure- The Sudden apprising, SCCONLINE (Mar. 22, 2024, 3:43 PM),

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