What is the doctrine of frustration of contract? Where the supervening event making performance impossible, was in the contemplation of the contracting parties where the contract was made......................?

Question: What is the doctrine of frustration of contract? Where the supervening event making performance impossible, was in the contemplation of the contracting parties where the contract was made, would performance or further performance of the promise be excused? Where the performance of the contract after it is made becomes impossible, will the party who has received any benefit under it, be bound to restore it to the other party? [RJS 1977]

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Answer

The Doctrine of Frustration is an English Contract Law doctrine that acts as a device to set aside contracts where an unforeseen event either renders contractual obligations impossible or radically changes the party’s principal purpose for entering into the contract. The doctrine of frustration is based on the maxim Lex non cogit ad Impossibilia. This signifies that the law never compels us to do impossible acts.

The Indian Contract Act, 1872, does not define the term “frustration of contract”. However, the doctrine of frustration is enshrined under Section 56 of the Act. According to Section 56,

an agreement to do an impossible act is in itself void. Further, it states that when a contract to do an act becomes impossible, or, by reason of some event which the promisor cannot prevent, it becomes unlawful, the whole contract becomes void when the act becomes impossible or unlawful. 

Satyabrata Ghose v. Mugneeram Bangur and Co., 1954 AIR 44, 1954 SCR 310: In this case, the defendant company promised to sell the plaintiff a plot of land after developing it by constructing the roads and drains. However, some portion of the area comprised in the scheme was requisitioned for military purposes. 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 of the Indian Contract Act.

In the scenario described, where the supervening event making performance impossible was within the contemplation of the contracting parties at the time the contract was made, the doctrine of frustration may not apply. This means that if the event was foreseen and the parties had contemplated its potential impact on the contract, they may be expected to have made provisions for it in the contract itself.

However, if the event was unforeseen or outside the contemplation of the parties when they entered into the contract, the doctrine of frustration may be invoked. In such cases, the party seeking to rely on frustration would argue that the performance or further performance of the promise should be excused due to the impossibility or impracticability caused by the supervening event.

Under the doctrine of frustration, if the performance of the contract becomes impossible after it is made, the party who has received any benefit under the contract would generally be required to restore or return that benefit to the other party. This is based on the principle of fairness and preventing unjust enrichment. Essentially, if one party has received a benefit without fulfilling their part of the contract due to frustration, it would be unfair for them to keep that benefit.

It's important to note that the application of the doctrine of frustration can vary depending on the jurisdiction and the specific facts of the case. Contract law can be complex, and it's advisable to consult a legal professional for specific advice related to your situation.