Dr.

RAMMANOHAR LOHIYA NATIONAL LAW

UNIVERSITY

“Doctrine of Frustration”
Law of Contract -I

Submitted to: Submitted by:

DR. MANOJ KUMAR HARIOM MUDGAL

ASST. PROFESSOR 2nd SEMESTER

DR. RAMMANOHAR LOHIYA NATIONAL ROLL NO. 03

LAW UNIVERSITY , LUCKNOW SEC- B

ENROLLMENT NUMBER 180101054

 DECLARATION

I Hariom Mudgal hereby declare that the project entitled “Doctrine of

Frustration’’ submitted for the subject of “Law of contracts-I” in Dr.
Rammanohar Lohiya National Law University, Lucknow under the guidance
of Assistant Professor Dr. Manoj Kumar in the 2nd semester .
 CERTIFICATE

This is to certify that the project entitled, “Doctrine of Frustration’’ submitted by Hariom
Mudgal partial fulfilment of the requirements of the award of completion of the project report
in “Law of contract-I” at “Dr. Rammanohar Lohiya National Law University” is an authentic
work carried out by him under the supervision and guidance of Assistant Professor Dr. Manoj
Kumar

To the best of my knowledge, the matter are in the project has not been submitted to any
other university/ institute.

Project Guide Name: Dr. Manoj Kumar

Designation: Assistant Professor

Institution name : Dr. Rammanohar Lohiya National Law University, lucknow

 ACKNOWLEDGEMENT

This project involves a lot of hardwork , research and dedication. Still implementation would
not have been possible if I did not have the support of many individuals and the institute.
Therefore I would like to thanks all my friend and teacher and staff member of my institute
who supported me for complete this project .

Firstly I am thankful to my institute National Law University, Lucknow for their

infrastructural support and for providing his experience and guidance to mould in the
project.

I am also thankfull to the Hon’ble Vice Chancellor of the University Dr.S.K Bhatnagar for
his unconditional support and guidance in making this project.

Last but not the least I am also grateful to my mentor and guide Assistant Professor Dr.
Manoj Kumar for providing this interested topic to prepare a project upon and providing in
with some pertinent inferences which proved to be of great help in moulding this project.
Without his knowledge and support , the project would not be competed in a time , and thus
their support has been essential.

Nevertheless, I would also like to thank my peers for providing assistance in preparing this
project in times of need.
 TABLE OF CONTENTS

SERIAL TOPIC PAGE NO

NO
1. Introduction 8

2. Emergence of doctrine of frustration 9

3. Meaning of frustration 10

4. Impossibility of performance 10-11

5. Compensation for loss through non-performance of act known to 12

be impossible or unlawful

6. Doctrine of frustration under Indian law 13-15

7. Application of doctrine of frustration 15-23

8. conclusion 24

9. bibliography 26
 LIST OF CASES

SERIAL TITLE CITATION

NO
1. BP Exploration Co Ltd v Hunt (1979) 1 WLR 763

2. Charan lal Jain v Arun kumar Jain AIR 1979 Del 188

3. Channel Island Ferries Ltd v Sea Link U.K Ltd 1988

4. Denny,Mott and Dickson Ltd v B Foster and Co Ltd (1944) AC 265

5. FA Tamplin steamship co ltd v Anglo-Mexican petroleum Co (1916) 2AC 397

Ltd
6. Jawala Prasad v Jawala Bank Ltd AIR 1957 SC 1976

7. Joseph Constantine construction co Ltd v Imperial Smelting 1942AC 154 (1941) 2

Crop All ER
8. Krell v Henery 1903 2 KB 740

9. Nickoll v Ashthon Edrige and Co (1916) 2 KB 126

10. Paradise v Jane (1647) 2 ER

11. Parshotam Das v Municipal Committee AIR 1949 PC 144

12. Parmeshwari Das Mehra v Ramchand AIR 1952 Punj 34

13. Rama Ayer v Jacob (2003) KLT (SN)

14. Robinson v Davinson

15. Reiley v The King (1934) AC 265

16. Satyabarta Ghosh v Mugneeram AIR 1954 S.C. 47

17. Taylor v Codwell Q.B.(1863)

18. Uttamchand v Mohandas AIR 1946

 LIST OF ABBREVIATIONS

AIR ALL INDIA REPOTER

SCC SUPREME COURT CASESS

ALJ ALLAHABAD LAW JOURNAL

PC PRIVY COUNCIL

QB QUEEN’S BENCH

SCR SUPREME COURT REPORT

Supra AS STATED EARLIER

AER/All ER ALL ENGLAND LAW REPORTERS

WLR WEEKLY LAW REPORTS

WR WEEKLY REPORTER
 INTRODUCTION
Some legal system accept that changes of circumstances may justify modifying a contract

where to maintain the original contract would produce intolerable results incompatible with

justice1. But many legal system, including English law, concerned that modification would

under the certainty and alter the risks allocated by the contract, make provision for discharge

of a contract only where ,after its formation, a change of circumstances makes contractual

performance illegal or impossible. In English law such a situation is provided by the doctrine

of frustration.2Originally the term was confined to the discharge of maritime contract by the

frustration of the adventure but it has now been extended to cover all cases where an

agreement has been terminated by supervening events beyond the control of either party. 3But

the doctrine is not one of impossibility; some kind of impossibility may in some

circumstances not discharge the contract at all, while ‘impossibility’ does not accurately

describe the cases of frustration of commercial purpose where the fundamentally different

situation which has unexpectedly occurred means the performance would be, as a matter of

business, radically different from the contractually stipulated performance4

The doctrine of frustration have emerged from the case law have been summarized by

Bingham LJ 5in the following terms

The doctrine of frustration was evolved to mitigate the rigor of the common law’s insistence

on literal performance of absolute promises… the object of the doctrine of frustration was to

give effect to the demands of justice, to achieve a just and reasonable result, to do what is

1
Lando and Beale, principles of European contract law part 1 and 2 (2000) 328
2
Treitel, frustration and force majeure (2 nd edn, 2004)
3
Intial impossibility and misunderstanding that exist at the time of frustration of the contract, sometime referred
to as pre contractual frustration
4
Joseph Constantine steamship line ltd v imperial smelting corp. ltd (1942) AC 154, 164
5
J Lauritzen AS v wijsmuller BV page no 494
reasonable and fair, as an expedient to escape from injustice where such would result from

enforcement of a contract in its literal terms after a significant change in circumstances.

EMERGENCE OF DOCTRINE OF FRUSTRACTION

Before 1863 there is general law in law of contract 1872 that the person have to follow all the

condition that laid down in the contract person cannot excused by mere the fact that the

performance of contract are impossible for him /her so if the contract cannot formed which

particular time is prescribed in a contract the person have to pay damages for not doing it,

although in consequence or unforeseeable circumstances the performance of the contract has

became impossible for him in the case of,

Paradise v Jane6 (1647)

P sued j for rent due upon a lease in his argument in a court j pleaded that a cetain german

prince, by name prince rupet an alien born enemy to the king and kingdom had attacked the

realm with hostile army of men and with his attacking force did enter the defendant

possession and throw it defendant from his possession …. Whereby he could not take the

profit that j pleaded in his argument that he is deoprived from his possession due to

overwhelming force attacked him in his kingdom he is beyond his control so that he cannot

given the rent beacaue he deprived from his land and the event beyond his control of the

profit which the rent should have come .

The court held that laisee should compensate to laisor whatever circumstances are happened

to laisee it is immaterial whether he may be deprived his land or other external force are

come to his possession and throw out him .when the party by his own contract create a duty

to charge upon himself he is bound to complete his duty that arise during the contract any

6
[1647] EWHC KB J5
circumstances are happended to him that he is enable to complete his duty that formed after

the contract making he is ought to repair it . whether whatever consequence are arising that is

impossible for him he have to recompensate it

Meaning of frustration

To understand the concept of frustration first we have to analyze one of the most famous

case decided by BLACKBURN J in the case of Taylor vs. Caldwell7 “rule is only applicable

when the contract is positive and absolute, and not subject to any condition either expressed

or implied”. “ the fact of the case the defandant agree to let out plaintiff music hall for a

certain date for a purpose of helding concert day before concert to be held the music hall got

on fire the concert hall fully destroyed either the fault of both the parties the plaintiff sued

defendant for the loss . the defendant pleaded that the contract are not absolute in nature and

its performance depend upon the continuous use of hall it was therefore , subject to an

implied condition that the parties shall be excused in case, before breach, performance

becomes impossible from the perishing of thing without default of the contractor.”

 Thus, the doctrine of frustration comes into existence in two types of condition , first, where

the performance is physically cut off, and, second, where the object has not achieved .

Impossibility of performance

Impossibility of performance is two kinds

Initial impossibility

7
QUEEN’S BENCH,(1863) 3 B &S 826
Sec 56 in this section the principal said that ‘’an agreement to do an act impossible in itself is

void for ex-an agreement to discover gold by magic is impossible, the contract itself void.

We now that the contract are formed between two parties for a possible thin but the impossible

contract cannot be concluded so itself become void there are some circumstances are happened

both the parties that become possible to performed it that contract are itself void in the eyes of

law for ex – agreement that singer has to sing at night before singing in to stage he fall ill in that

particular scenario contract itself void beacouse it is impossible for singer to performed on stage

because of his ill health the contract itself void in the eyes of law so many cases are happened

in the country that performance become impossible either of the parties contract in each case

becomes void8.a contract is deemed to have been become impossible of performance and, thus,

void following circumstances

 the subject matter of the contract; are destroyed

 By death or permanent incapacity of the parties (like insanity) where the contract is

personal in nature;

 Supervening impossibility or illegality, involving actions contrary to law or public

policy;

 Outbreak of war, war restrictions (avoidance of trading with alien enemy, and so on);

 Imposition of government restriction or orders or acquisition by government; and

 Non-existence or non-occurrence of a particular state of things.

Frustration may be defined as the occurrence of an intervening event or change of circumstances

so fundamental as to be regarded by the law both striking at the root of the agreement, and as

entirely beyond what was contemplated by the parties when they entered into the agreement. If

an event which could not be foreseen by both parties supervenes, frustration would apply.
8
Chaman lal Jain v Arun Kumar Jain AIR 1996 Del 188
Section 56 of the Indian Contract Act, 1872 does not deal with the cases in which an event, the

parties took it for granted will never happen does happen and makes the performance of the

contract impossible. If it be held that this Section is exhaustive, no relief can be granted to any

of the parties on the happening of such an event, but this would be against the very principle

underlying the Section.(16)

If the inability to perform the contract is due to the fault of one of the parties, he cannot

successfully plead frustration. It is also true that if the parties expressly contract with reference

to the occurrence of the supervening events, frustration is inapplicable. But there is another type

of case outside these rules. The parties when they made the contract, may have foreseen the

supervening event as probable, but may have made no express provision with respect to it. Here,

if such event occurs, frustration can be pleaded. (17)

Compensation for loss occurred during the non-performance of act known to

be impossible or unlawful in nature

Where one person has promise to do something which he knew ,or with reasonable

diligence, might have known, and which the promise did not know, to be impossible or

unlawful, such promisor must make compensation to such promisee for any loss which such

promise sustain through the non- performance of the promise.

Doctrine of frustration occupies a special place in the law of contract .The doctrine of

frustration was evolved to mitigate the rigueur of the common law’s instance o literal

performance of absolute promises.i Under the doctrine of frustration a contract may be

discharge it after its formation events occur making its performance impossible 9 The English

common law historically hold the parties to their bargain, thus leaving them to make their
9
Cheshire,fit foot and fursten’s law of contract 15 edition,oxford university press New Delhi 2007
own provision. For event outside of their control, for circumstances which may make their

obligation more burdensome and for instances which may render further performance of

contract impossible.10It was a general rule of law of contract before 1863 that a person was

claim to be excused by the mere fact that performance of obligation had subsequently become

impossible11.

Doctrine of frustration under Indian law:

When the performance of the contract becomes impossible, the purpose which the parties

have in mind is frustrated. If the performance becomes impossible, because of a supervening

event the promissory is executed from the performance of the contract. This is known as

doctrine of frustration under English law, and is covered by section 56 of Indian contract Act.

The basis of the doctrine of frustration was explained by Mkherjea J. In the Supreme Court

decision of Satyabarta Ghose v Mugneeram in the following words:12

The essential idea upon which the doctrine is based is that of impossibility of performance of

the contract; in fact impossibility and furstrtion are often used make the performance of the

contract impossible and the parties are absolved from the further performance of it as they did

not promise to perform an impossibility …The doctrine of contract is really an aspect or part

of the law of discharge of contract by reason of supervening impossibility or legality of the

act agreed to be done and hence comes within the purview of section 56 of contract Act

The performance of the contract had become physically impossible because of dissapperance

of the subject matter.But the principle is not confined to physical impossibilities .It extends

also to cases where the performance of contract is physically impossibilities.Its extands also

10
Mulla,Indian contract act and specific relief act 12 edn (Butterworth India new delhi 2001
11
S.S Ujjannawar ,cases and materials of contract
12
AIR 1954 S.C.47 ,contract-1 R.K.Bangia
to casse where the performance of contract is physically possible,but the object the parties

had in mind has failed to materlise .The well-known coronation cases of which Krell v

Henry13 is one,in the fact of this case is

the defendant to hire from the plaintiff a flat for June 26 and 27,on which days it had been

announced that the coronation procession would pass along that place.A part of the rent was

paid in advance ,But the procession having been cancelled owing to the illness,the defendant

refused to pay the balance.

It was held that the real object of the contract,as recognised by both contracting parties,was to

have a view of the coronation procession was,therefore,the foundation of the contract.The

taking place of the procession was,therefore,the foundation of the contract.The object of the

contract was frustated by non happening of the coronation and the plantiff was not entiteled

to recover the balance of the balance of the rent.

Thus, the doctrine of furstation comes into play in two types of situation, first where the

booth he performance is physically cut offhand second, where the object has failed. The

Supreme Court of India has held that Section 56 will apply to both kinds of frustration. The

principal was \applied by TEJA SINGH J of Punjab H.C.in Parshotam das v Municipal

Committee14

A Municipal Committee leased out certain tonga stands to the plaintiff for Rs 5000.But no

tonga driver came forward to use the stand throughout the year and the plantiff could not

realize anything. He sued for the refund of his money.

It was held that “the plaintiff obtained the lease and the committee granted the same to him

on the assumption that the Tonga stands would be used by driver and the plaintiff would
13
(1903) 2KB 740(1900-3)All ER Rep 20(CA)
14
AIR 1949PC 144
recover fess from them, but for reasons which both sites could not help the driver did not use

the stands, the doctrine of frustration applied with full force’’

Mulla has summarized the doctrine of frustration and its operation in following word

‘’the doctrine of furstation was evolved to a mitigate the rigidity of the common law’s

persistence on literal performance of absolute premises. The main purpose of the doctrine of

frustration was to give effect to the demands of justice as a measure to escape from injustice

where such would result from enforcement of a contract in its literal terms after a significant

change in circumstances. This doctrine of frustration must be kept within narrow limits and

ought not to be extended and is not to involved lightly since the effect of frustration is to kill

the contract and discharge the parties from further liability under it .The essence of frustration

is that it should not be due to the act or election of party seeking to rely on it, frustration

brings the contract to end forthwith and automatically the frustration event must be some

outside event or extraneous change of situation and it must the place without fault on the side

of the party seeking to rely on it15.

Application of doctrine of frustration

A contract may be frustrated if it become impossible to perform or it purposes become

frustrated or if performance becomes illegal. The doctrine of frustration of contract is

applicable to a range of contract is applicable to a range of contract.

The principle of frustration of contract or, of impossibility of performance is applicable to a

great variety of contracts. It is therefore, not possible to lay down an exhaustive list of

situation in which the doctrine is going to be applied so as to excuse performance. The law

upon the matter is undoubtedly in process of evolution16.The following grounds are-

15
Mulla Indian contract act and specific relief act 12 Ed.
16
A.L.Corbin Recent development in contracts (1937)
Destruction of Subject-Matter

The doctrine of impossibility applies with full force where the actual and specific subject

matter of contract has ceased to exist ‘Taylor v Coldwell’17’ is the best example of this class’.

There, a promise to let out a music hall. The another case is ‘Howell v Copland’

The defendant contracted to sell a specified quantity of potatoes to be grown on his

farm, but failed to supply them as the crop was destroyed by a disease.

Change of circumstances-

A contract will frustrate, ‘’where circumstances arise which make the performance of the

contract impossible in the manner and at the time contemplated.18 KAPUR J the Punjab high

court in Pameshwari Das Mehra v Ram chand19 explained the principle thus.’’ It is clear that

if there is entirely unanticipated change of circumstances has affected the performance of the

contract to such as extent as to make it virtually impossible or even extremely difficult or

harzardous.If that be the case, the change of circumstances not having been brought about by

the fault of either party, the court will not enforce the contract.In this case

A contracted to supply to B certain classes and qualities of American piece goods.The

contract was Karachi. The goods arrived there after some delay.B refused to accept on the

ground that both the qualities and quantities offered for delivery were not according to the

particular contract. A called upon B to refer the dispute to the nominated arbitrator who was

residing at Karachi .Then came partition which made it impossible for non –Muslims to

karachit.

17
(1863)3 BS 826;122 ER 309
18
Viscount Maugham in joseph Constantine line ltd v imperial smelting corpn, 1942AC 154(1941)2All ER 165
(HL)
19
AIR 1952punj 34,38
Holding that the contract was not thereby frustrated,the court said ‘’If it was necessary for the

parties to go to Karachi and to take witness there,the performance of the arbitration

agreement would have rendered impossible.But ,as going to Karachi was not necessary ,the

change of circumstances did not have a material effect on the contract’’

CASE –Joseph Constantine construction co ltd v Imperial smelting corpn20

As against this, where a ship was chartered to load a cargo but on the day before she

could have proceeded to her breath, an explosion occurred in the auxiliary boiler, which made

sit impossible for her to undertake the voyage at the scheduled time, the House of Lords held

that frustration had, in fact, occurred in the circumstances.

Non- occurrence of particular event

The principal of frustration has also been held to apply to cases concerning of an expected

event. In the so-called Coronation cases which arose out of the postponed of the coronation of

King Edward VII owing to his sudden illness, it was applied to contracts the performance of

which depended on the existence of occurrence of particular state of things forming the basis

on which the contract had been made.

Death or incapacity for personal

Where performance of obligation under a contract for the personal service is rendered

impossible or radically different by the death or incapacitating illness of the promisor, the

contract will be frustrated. In Stubbs v Holywell Railway it was held that a contract for

personal service was put an end to by the death of the party by whom the service were to be

rendered. And in Robinson v Davinson in this case D’s wife an eminent piano player,

20
1942 AC154(1941)2All ER
perform at a concert but was prevented from doing so by a dangerous illness. An action was

brought against D claiming damages for breach of contract.

It was held that the contract was discharged by D’s wife illness, and it was not therefore

broken by her failure to perform, nor on the other hand, could she have insisted on

performing when she was unfit to do so as frustration is not brought about by an act of

election. These are example of cases where performance by relevant party is personal and

cannot be carried out by anyone else so that death or illness gives rise to frustration

Requisitioning of ships and interferences with charter parties

A number of cases have arisen concerning charter parties, and these provide some of the most

important instances of the application of the doctrine

In FA Tamplin steamship co ltd v Anglo-Mexican petroleum product co Ltd21

In wartime, ships are often requisitioned for such time and for such purposes as the

government may require them. If the ship is under charter party the question will arise

whether or not the requisitioning operates so as to frustrate the rights of the ship-owners and

characters under the agreement. The steamship FA Templin was chartered by a time charter

party for 5 year from 4 Dec 1912 to 1917.In Feb. 1915 the government requisitioned the ship

for use as a troopship and made certain structural alteration to her for this purpose. The

charters were willing to go on paying the agreed freight under the charter party, but the

owners claimed that the contract had been frustrated by the requisition as they wished to

obtain a larger amount of compensation from the crown.

21
(1916)2AC397
The House of Lords, by a bare majority, held that the contract still continued. The

interruption was not sufficient duration to make it unreasonable for the parties to go on. There

might be many months during which the ship would be available for commercial purposes

before the five year expired.

According to the lord SUMNER a contingent may be provided for, but not in such terms as to

show that the provision is meant to be all the provision for it. A contingency may be provided

for, but in such a way as shows that it is provided for only for the purpose of dealing with one

of its effect and not with all.

Sale and carriage of goods

Similar principles have been applied to contracts for the sale of goods to be carried by sea. In

Nickoll v Ashton edridge and co, 22for ex a cargo, sold by the defendant to claimants was to

be shipped ‘per steamship Orlando ...during the month of January. Without default on the

defendant’s part the ship was so damaged by stranding as to be unable to load in January. It

was held that in these circumstances the contract must be treated as at an end.

Building contracts

22
(1901 2 KB126
Doctrines of Frustration are provided by a group of cases concerning building or construction

contracts. Events may occur which hold up completion of the works. Such delay inevitable

increase the contractor’s costs. If the contract is a fixed-price into loss. In Davis Contractors

Ltd v Fareham UDC23

In july 1946,D entered into a contract with farehan UDC to build 78 houses for a fixed sum

of 94,424.owing to the unexpected shortage of skilled labour and of certain materials the

contract took 22 month complete instead of the 8 month expected ,and cost some 15000 .D

contended that the contract had been frustrated and that they were entitled to claim on a

quantum merit for the cost actually incurred

The house of lord refused to accept this contention. The mere fact that unforeseen

circumstances had delayed the performance of the contract, and rendered it more onerous to

the appellants, did not discharge the agreement. The ultimate situation was still within the

scope of contracts; the contract; the undertaken was not, when performed, different from the

contract for.

Change in the law

Their performance of contract may be made legally impossible either by a change in the law

or by a change in the operation of the law by reason of new facts supervening. The law many

actually forbid the doing of some act undertaken in the contract;24 or it may take form the

control of the promisor something in respect of which it has contracted to act or not to act in a

certain way, as for example where a price for land subject to a restrictive covenant against

building is compulsorily acquired and built upon by act of parliament. Such cases are

23
(1956) AC 696
24
Denny, Mott and Dickson ltd v B Foster and Co Ltd(1944) AC 265
explained by the policy and elementary; proposition that if the further performance of a

contract becomes impossible by legislation having that effect is discharged.25

The outbreak of war is another event which, by changing the operation of the law, may have

the effect of abrogating obligation outstanding under a contract by reason of supervening

illegality, if one of the parties resides in this country and the other in enemy or enemy

occupied territory, and the contract is one which involves dealing with the enemy. So strong

is public policy consideration in this situation that the contract will be wholly frustrated, even

though the parties themselves provide that their obligations shall be merely postponed.26

Performance of only one party affected

In case of supervening illegality, a frustrating event only affects the liability of one of the

parties to perform, while the other party, who usually has to pay money, is still capable of

performing. So in the requisitioning cases considered above, the characters were able to pay

the hire, and may have been willing to do so notwithstanding the non availability of the ship,

since the rate paid by the government for requisitioned ships was higher than that payable

under the charter.27 Nevertheless, if the event is a frustrating one, it excuses both parties even

where this may be to the advantage of the party who is unable to perform.

Theories of frustration

Considerable judicial attention has been paid to the theoretical basis on which the doctrine of

discharge of contract by frustration rests, perhaps because of a perceived need to explain why

25
Reilly v The King (1934) AC 176, 180
26
Ertel Biber and Co Rio Tinto co ltd
27
FA Tamplin steamship co ltd v Anglo-Mexican petroleum Co Ltd(1916) 2AC397
a finding of frustration does not constitute a reallocation of risks nor permit an escape from a

bad bargain28

Successive pronouncement of House of lord have set out a number of learned, but often

contradictory, opinions concerning this issue and a number of theories have been put forward

at various times. Since there is a new general agreement on the appropriate test to be applied,

it is necessary to refer only four principle, test or theories.

Implied term

At one time the preponderance of judicial opinion favored the view that frustration of a

contract depended upon the implication of a term although, as we have noted this did not

explain discharge where the performance of contract is made legally impossible by a change

in law o its operation.29 Lord Lorebur’s speech in FA Tamplin Steamship co Ltd v Anglo-

mexican Petroleum product Co Ltd30 contain the classic exposition of the reasons on which

the implied term theory of frustration was based:

A court can and ought to examine the contract and the circumstances in which it was made,

not of course to vary, but only to explain it, in order to see whether or not from the nature of

its parties must have made their bargain on the footing that a particular thing effect will be

implied, though it not be expressed in contract…Sometime it is put that an impossibility.

Sometime it is put that the parties contemplated a certain state of things which fell out

otherwise.

A contract would therefore be frustrated if a term could be implied that, in the events that

subsequently happened, the contract would come to an end. The expression an implied term
28
Pacific photoshop co ltd v Empire Transport(1920)4LLR 189
29
In the hereby of implied contract theory legal impossibility was sometime said to differ from others categories
of frustration. Joseph Constantine SS LINE Ltd v Imperial Smelting Crop Ltd (1942)AC 153
30
(1916)2 AC 397
is however, ambiguous. It may be used in subjective sense, that is to say, it may mean a term

which the court regard into the contract in order to give effect in a letter case, the law is only

doing what the parties really meant to do for themselves.

The implied term may be formulated more objectively. It may mean a term which, in the light

of the events which have actually arisen, the parties as reasonable people would have

imported into the contract to deal what that possibility.

Just and reasonable result

The discharge of contract by frustration occurs, not because of the actual o reputed will of the

parties, but by operation of law. The doctrine of frustration is, as Lord Sumner pointed out, a

device by which the rules as to absolute contracts are reconciled with a exception which

justice demand.31 In declaring a contract to have been frustrated, the court exercises a

positive function: it releases the parties form further performance of the obligation which

they would otherwise be bound to perform.

Recognition of these facts led certain of the judges (and notably Lord Wright and Lord

Denning ) to the conclusion that the basis of the doctrine of frustration was the desire of the

courts to reach a just and reasonable result. 32 The truth is in accordance with what seems just

and reasonable in its eyes. This view, however, might be taken to suggest that a court had the

power to release the parties from their obligation whenever it was just and reasonable to do

so, even for example, where the only the effect of the subsequent event had been to render the

court financially more onerous than the parties had anticipated. But it is clear that the

circumstances in which a contract will be held to have been frustrated are for, more limited in

scope.
31
Hirji Mulji v Cheong Yue SS co Ltd (1916)AC 154
32
Legal Essays and Addresses (1939) Denny, Mott and Dickson Ltd v James B Fraser and co Ltd (1944) AC
265
Theories not applicable in India

Referring to the theories B.K. Mkherjea J of the Supreme Court said in Satyabrata Ghose v

Mugneeram Bangur and Co.33 “in the way of These differences formulating legal theories

really do not concern us so long as we have statutory provision in the Indian Contract Act. In

deciding cased in India, the only doctrine that we have to go by is that of supervening

impossibility or illegality as laid down in sec 56 of the contract act, taking the word

‘impossible’ in the practical and not literal sense. It must be borne in mind, however, that sec

56 lays down a rule of positive law and does not leave the matter to be determined according

to the intention of the parties.’’

Conclusion

The law relating to frustration of contract in India is covered statutorily better than that of the

English law there is no concurrence among judges on the reason behind the frustration of a

given contract. But in India as the provisions are contained is well defined terms, the change

of conflicting opinions are minimal.

Under the Indian law, the doctrine of frustration is an aspect of law of discharge of contract

by reason of supervening impossibility or legality of contract to be and house comes within

the preview of sec 56 of Indian contract act 1872. Therefore, the position in effect is that in

Indian law it is not necessary to have any resort to any legal fiction or legal theory for

application of doctrine of frustration. The court in India appear to have understood the real

purport of the provision of the act and then they are applying them correctly to actual factual

situation of contract arising before them for decision34

33
AIR 1954 SC 44:1954 SCR 310
34
Journal of Indian law Institute, Vol 37,No 4(1995) p. 446
 The decision of English court possess only a persuasive value but they may be helpful in

showing how the court in United kingdom have decided cases under circumstances similar to

these which have come up before the Indian courts. Initially the Indian court including Privy

Council appears to hold the opinion that the law under section 56, the courts appear to have

changed their opinions.

In the view of the provision of sec 56, the Indian law on doctrine of frustration seems to lie

comparatively on a more sound footing then the English Law. It is significant to note that fear

of misuse of principle of supervening impossibility by any dishonest party has duly been

taken care of vide paragraph three of sec 56 which obligation the person, who with any

innocent person in spite of the fact that such agreement is otherwise void. This type of

structural agreement is not found under English law. The Indian courts have developed it by

process of interpretation. The role played Supreme Court placed it on a comparatively clear

foundation through its remarkable judicial craftsmanship itself into a clear form and whatever

ambiguity there had been in past has been settled substantially in application of the doctrine.

Bibliography

1. Anson’s Law of Contract, 28th edn, (ed J.Beatson), Oxford University Press, New York, 2002.
2.      Cheshire, Fifoot & Furmston’s Law of Contract, 15th edn, (ed M.P. Furmston), Oxford
University Press, New Delhi, 2007
3.      Mulla, Indian Contract and Specific Relief Acts, 12th edn, (ed Nilima Bhadbhade),Vol.1,
Butterworths India, New Delhi, 2001
4.      S.S. Ujjannavar, Cases and Materials on Contract, 1983
5.      Treitel, The Law of Contract, 12th edn, (ed Edwin Peel), Sweet & Maxwell Ltd., London,
2007
ARTICLES

1.      Journal of Indian Law Institute, Vol.37, No.4 (1995)

2.      The Cambridge Law Journal, Vol. 24, No. 2 (Nov., 1966)
3.      http://www.docstoc.com/docs/23799980/The-Doctrine-of-Frustration

STATUTES REFERRED

1.      The Indian Contract Act, 1872

2.      The Law Reform (Frustrated Contracts) Act, 1943
i