What is Doctrine of frustration of contract with illustrations?

 The doctrine of frustration means that when, after a valid contract is made, a supervening event occurs without fault of either party, and that event makes performance impossible, unlawful, or fundamentally different from what the parties originally contemplated, the contract becomes void under Section 56 of the Indian Contract Act, 1872.

Meaning

Section 56 embodies the rule that the law does not compel a person to do what has become impossible. Frustration is therefore a mode of discharge of contract by operation of law, not by choice of the parties.

Essentials

For frustration to apply, these conditions are usually present:

• A valid contract exists.

• After formation of the contract, a supervening event occurs.

• The event is beyond the control and without fault of either party.

• The event makes performance impossible, illegal, or radically different from what was agreed.

• Mere commercial difficulty, delay, or increase in expense is not enough.

Illustrations

• A agrees to sell and deliver goods to B in a foreign country, but after the contract a war breaks out and trade with that country is prohibited by the government; the contract is frustrated because performance has become unlawful.

• A contracts to let a hall to B for a concert on a fixed date, but before that date the hall is destroyed by fire; the contract is frustrated because the subject matter has perished.

• A agrees to perform at an event, but before the date A becomes seriously ill and cannot perform; if personal performance was essential, the contract may be frustrated.

Effect

When frustration occurs, the contract is automatically discharged from the point of the frustrating event. The parties are released from future obligations, and generally the case is not treated as a breach giving rise to ordinary damages for non-performance.

Interview answer

You can say: “The doctrine of frustration, under Section 56 of the Indian Contract Act, applies when after a valid contract is made, an unforeseen event beyond the parties’ control makes performance impossible, unlawful, or fundamentally different from what was contemplated. In such a case, the contract becomes void automatically; for example, destruction of the subject matter, supervening illegality, or death or incapacity in a contract of personal service.”

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