Doctrine of Frustration

The doctrine of frustration was originated from the Roman Contract Law. The doctrine comes into play when the parties are emitted when the sole purpose of the contract becomes unachievable. In such scenarios, courts can give relief on the grounds of succeeding impossibility if the entire purpose of the contract was frustrated by the occurrence of unforeseeable events (That were not looked upon by the parties, during the commencement of the contract).

This was sourced in the English law after the case of Taylor v. Caldwel^[1], where an opera house that was rented for concerts was destroyed by fire (none of the parties were responsible for the event), making the contract frustrated. The effect of force majure and this doctrine is that it ends up relieving the parties from further performance of the contract.

Force Majeure in Indian Law:

The doctrine of frustration can be seen in Section 56 of the Indian Contract Act 1872, Agreement to do impossible act – void in itself. It frees the parties involved in the contract from contractual obligation when the circumstances are seen to be beyond the control of the parties involved.

The Supreme Court pointed out that relief cannot the availed by the defendant when the contract is breached due to their own actions or decisions, but once it is established the onus probandi stands dispensed for the specific period of force majeure.

• In the case of Dhanrajamal Gobindram vs Shamji Kalidas And Co^[2]., the Hon’ble court gave an analysis of the prior verdicts on “force majure” and held that in the references made in this account the intention is to save the parties from the consequences of something that they did not cause or had no control over. This is the widest meaning of this doctrine. It is obvious that the condition about force majure in the agreement was not indistinct. The use of the word “usual” is what makes the difference which was in contemplation of parties.
• In the case of Sushila Devi vs Hari Singh.^[3], judgment expanded upon the scope of the doctrine of frustration, ‘impossibility’ under section 56 of the Indian Contracts Act, 1872 should not merely cover the incidents caused by humans. In this case, the lease of the property itself was the subject matter of the agreement. Later after the events of partition, a part of the same property became a part of Pakistan, hence making the terms of the agreement unattainable.
• Similarly, in the case of Alopi Parshad & Sons Ltd. v. Union of India^[4], the Supreme Court pointed that The Act does not allow a contracting party to reject the contract’s specific covenants and demand payment of consideration for contract performance at rates other than the set rates based on a vague claim of equity. Parties to an executable contract are frequently confronted with unforeseen events during the course of carrying it out, such as a fully anomalous spike or fall in pricing that creates an unexpected impediment to execution. This does not, by itself, negate the agreement they previously reached.

Over a period of time, the court has identified certain instances where the doctrine of frustration can be claimed, such instances are:

• In the case of non-occurrence of an event, where it was unforeseeable or could not have been determined and makes the entire purpose behind the contract is unachievable.
• Destruction of subject matter can also be a case where the given doctrine can be applied. [Taylor vs Cadwel]^[5]

1. A contractual agreement will frustrate when the occurrence of a certain situation makes the contract impossible to achieve. [Pameshwari Das Mehra v Ram Chand Om Prakash^[6]]

• In the event of war
• The contract will be frustrated in the case of a legislative action that affects the working or the motive of the very contract.
• In the case where the fulfillment or functioning of a contract depends upon the promisor, his death or debility will result in the termination of the contract.

Conclusion

The law is dynamic and takes shape according to the needs of the society, the purpose of the doctrine is to deal with certain situations where the fulfillment of the contract is effected without the fault of the parties. It brings lucidity in the situations or cases where there is a conflict between the principle of absolute liability and the principle that a contract is discharged when the ‘common purpose^[7]’ has been abolished due to the change of circumstances.

^[1] Taylor v Cladwel  EWHC QB J1, (1863) 3 B & S 826, 122 ER 309

^[2] Dhanrajamal Gobindram vs Shamji Kalidas And Co., AIR 1961 SC 1285

^[3] Sushila Devi vs Hari Singh., 1971 AIR 1756, 1971 SCR 671

^[4] Alopi Parshad & Sons Ltd. v. Union of India, 1960 (2) SCR 793

^[5] Taylor v Cladwel  EWHC QB J1, (1863) 3 B & S 826, 122 ER 309

[6] Parmeshwari Das Mehra And Sons vs Firm Ram Chand Om Prakash And Anr. 1951 AIR 1952 P H 34

^[7] Smit, Hans. “Frustration of Contract: A Comparative Attempt at Consolidation.” Columbia Law Review 58, no. 3 (1958): 287–315. https://doi.org/10.2307/1119665.