FRUSTATION

In case the performance of the contract becomes impossible, the purpose, which the parties have in their mind, is said to be frustrated. If such performance is not possible because of some supervening occurrence, the promisor can be excused from performing the contract if the grounds seem to be valid. This is referred to as ‘doctrine of frustration’ under the English law and in India, it is enumerated under section 56 of the Indian Contract Act, 1872 (hereinafter called as ‘Contract Act’). The ‘doctrine of supervening impossibility’ as envisaged under section 56 of the Contract Act is similar to that of the ‘doctrine of frustration’ under the English law. The expression ‘frustration of contract’ means “occurrence of an intervening event or change of circumstances so fundamental as to be regarded by the law both as striking at the root of the contract, and as entirely beyond what was contemplated by the parties when they entered into the contract”. The doctrine is a sort of shorthand; it means that a contract has ceased to bind the parties on which mutual understanding it was based. It is not that the contract has been frustrated but that there has been a failure of what in the contemplation of both the parties would be the essential condition or purpose of the performance.

Grounds for Frustration:

Mentioned below are some of the grounds for frustration:

• If the subject- matter of the contract is destructed, the contract is considered to be frustrated.
• If the circumstance changes to make the performance of the contract impossible, or even extremely difficult in the manner that upsets the purpose of the contract is considered as a ground for frustration.
• Sometimes the performance of the contract remains possible, but owing to the non-occurrence of a contemplated event as the reason for the contract, the value of the performance is destroyed, and the contract frustrated.
• Where the nature of the term of the contract requires personal performance by the promisor, his death or incapacity puts an end to the contract.
• The intervention of war or war-like conditions in the performance of the contract is considered as a ground for the frustration of the contract.

Cases not covered by Doctrine of Frustration:

There are certain conditions where the impossibility of performance is not an excuse, and thus, cannot be considered as the ground for the frustration of the contract. They are:

• Merely because the procurement of the goods difficult due to mill strike or rise in price, or there is a sudden depreciation in the currency, or the person would not be able to earn the profit as expected, or the is an unexpected obstacle in the execution of it i.e., commercial difficulty or hardship is not enough to frustrate the contract.
• The doctrine of frustration does not apply to the cases of non-performance of the contract due to the default of the contracting party himself.
• If there are several purposes for which the contract is entered into, failure of any one of them does not terminate the whole contract and thus, also not attract the doctrine of frustration.