Read PDF Article 61 Supervening Impossibility Of Performance performance of the contract and thereby contract is discharged, (Section 56, Indian Contract Act, 1872). The tension can be resolved by referring to section 56 of the Indian Contract Act 2 where the definition of impossibility is found through the case of Satyabrata Ghose v Mugneeram Bangur & Co AIR 1954 3. LL.B (Hons.) The determination of the degree of change in the obligation must be done by looking into the construction of the contract in the light of facts existing at the time of its formation. It say that any act which was to performed other the contract was made become impossible or unlawful to perform. —An agreement to do an act impossible in itself is void." Contract to do act afterwards becoming impossible or unlawful: A contract to do an act which, after the contract is made, becomes impossible or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. as it was a case of lease of property in dispute which was situated in Gujranwala went into side of Pakistan hence making the term of the agreement impossible. Section 56 in The Indian Contract Act, 1872.  On a plain reading of Section 56 of the Contract Act, it is evident that the section envisages some impossibility or unlawfulness of the performance of the act which the parties had not contemplated. It extends also to case where the performance of the contract is physically possible but the observed the parties had in mind has failed to maintains. Doctrine of Constructive Notice: Meaning And Characteristics, The Duties of An Advocate Towards His Client. This section states as follow: An agreement to do an act impossible in itself is void. When a party to a contract is unable to perform its contractual obligation due to a supervening impossibility which the party could not prevent, then the defaulting party may be excused from performance of the contract in accordance with section 56 of the Indian Contract Act, 1872 or if the contract has a force majeure clause then in accordance with such clause - what is popularly referred … But section 56 only deals with case of subsequent impossibility as opposed to case of initial impossibility. It is covered by Section 56 of … As per Section 56 , an agreement to do an impossible act is itself void. The doctrine of frustration has been well done codified in India under section ‘56’in the Contract Act, and this obviates the dependence on different theories to justify the application of the doctrine. Considering the large implication on the obligation and binding nature of a valid contract it became important to analyse the factor that guide the court determine its application unlike common law the Indian contract law explicitly incorporates the doctrine of frustration under section 56 of the contract act however the evolution of this doctrine in India has been greatly influenced by English law. Supervening impossibility is the impossibility arising after the formation of a contract. 9 When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore, it, or to make compensation for it, to the person from whom he received it. Click to share on Facebook (Opens in new window), Click to share on WhatsApp (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on Pinterest (Opens in new window), An Interview with Dr. Aneesh V Pillai [Asst. Thus, a contract would come under the purview of Section 56 of the Contract Act even if it is not an absolute impossibility, but the contract has fundamentally changed, which the parties had not contemplated at the time of the agreement. When risk is inherent to contract frustration is self indicted the contract is an executed contract the contract can still be performed or the foundation of the contract is not substantially destroyed are example of factors that would  not attract provision of section 56. The relief under this section is given by the court on the ground of subsequent impossibility when it finds out that the whole purpose or the basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond the control of the parties. However, some portion of the area comprised in the scheme was requisitioned for military purposes. There must be a valid and subsisting contract between the parties; There must be some part of the contract yet to be performed; That part of the contract, which is yet to be performed, should become impossible or unlawful; and. Section 56 of the Contract Act stipulates that a underlying contract is rendered void when obligations under an agreement become impossible to perform or where occurrence of an unforeseeable supervening event frustrates performance of the agreement. Section 56 states that an agreement to do an act which becomes impossible or unlawful is void. Impossibility of Performance in Traditional Contracts: By Frustration/ Agreement to do impossible Act: Section 56 contemplates various circumstances under which agreement may be void, since it is impossible to carry it out. That the impossibility should be by reasons of some event which the promisor could not prevent. Events which make the performance of the contract impossible subsequent to the formation of the contract known as a supervening or subsequent impossibility. While deciding whether or not the contract has been frustrated, the courts objectively look to the construction of the contract, the effect of the changed circumstances on the parties’ contractual obligations, the intentions of the parties and the demands of justice.  A contract when entered and was capable of being performed, however, thereafter becomes impossible of performance for reasons of some event which a party could not prevent or the act for which the contract was entered itself become unlawful, then such contract itself becomes void or rather to say the contract becomes ‘frustrated’. The doctrine of frustration has been envisaged in Chapter IV in Section 562 of the Contract Act. An illustration of inherent impossibility of provided therein as A agrees with B to discover treasure by magic.  The assistance under Section 56 or rather the plea of the contract having frustrated is generally taken as a defence by a party who is under an obligation to perform a part of contract. In the above case the performance of the contract had become physically impossible because of the disappearance of the subject matter. The concept of frustration of contract is principally based on impossibility of performance of the contract. In satyabrata v/s mugneeram ( AIR  1954 S.C 44 ). 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. Section 56 of the Indian Contract Act 1872 deals with different situations when it becomes impossible to perform the contract impossibility maybe at the time of making of contract for agreement or maybe supervening impossibility or illegality, Section 56 of the act provides ‘Impossibility’ referred therein includes practical impossibility which goes to the root of contract or affects the object or purpose of the contract, i.e.  The doctrine of frustration qua the Section 56 of the Contract Act has been discussed extensively in the judgement of Supreme Court of India("SC") in the case of Satyabrata Ghose versus Mugneeram Bangur & Co & Anr5 and the same has been since followed in India. Section 56, of the contract act, deals with the impossibility of performance. Mukherjee J. further state while referring to the second paragraph to section 56. In that case, it would be impossibility ab initio. This view was upheld by Supreme Court in Satyabrata Ghose vs Mugneeram Bangur A.I.R. If a promisor knew or could, with reasonable diligence, have known that the act which he had promised to perform was impossible or unlawful, but the same was not known to the promise, in such a scenario the promisor is liable to make compensation for the loss which the promise may suffer in view of the non‐performance by the promisor. Job Post: Assistant Manager [Legal] @ RHFL, Chennai: Apply Now. factors and circumstances that the court consider while determining the applicability or non-applicability of section 56 has been dealt with in detail in this paper. Section 56 of the Act, declared such contract as void.  Section 56 of the Contract Act, however, provides for compensation to be payable for loss of non‐performance if the same was known to such party. The doctrine of supervening impossibility/frustration is cherished in the Indian Contract Act. If the event becomes impossible, such contracts become void", 7 Inder Pershad versus Campbell; (1881) 7 Cal. Section 56 of ICA 1872 deals with the doctrine of frustration of contract. Under Section 56, the court can proceed to grant relief on the ground of subsequent impossibility when the very foundation of the contract becomes upset by the happening of an unforeseen event which was not anticipated by the parties at … Held: The court dismissed the defendant’s suit stating that the ‘’impossibility’’ under Section 56( Agreement to do impossible act) doesn’t mean in the physical or literal context. The doctrine of frustration is an aspect and part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done, and hence comes within the purview of Section 56 of the Indian Contract Act, 1872. Section 56 of the Contract Act lays down positive rules and does not leave anything to be determined according to the intention of the parties. However, the term ‘frustration of contract’, explicitly, is not found in the Contract Act. Alternatively, it may supervene.  Section 32 postulates two things (i) the contingent contract is enforceable only on the happening of an uncertain event; and (ii) if the event, on which the contract is contingent which parties have contemplated at the time of entering the contract, becomes impossible, the contract becomes void. Doctrine of frustration as enshrined in section 56 of the Indian contract act 1872 deals with those case where the performance of contract has been frustrated and the performance of it is has become impossible to perform due to any unavoidable reason or condition. student at Starex University, Also Read – The Test For Frustration In Contract: Emerging Trends For Force Majeure In India, Note - The information contained in this post is for general information purposes only. Subscribe to our newsletter and get all updates to your email inbox! Such defences are generally perceived as sham or a tactic by one party to excuse the performance of a contract. However, this arises at the time when the promisor's performance is due. In this case, the defendant company promised to sell the plaintiff a plot of land after developing by its constructing the roads and drains. It was observed that the impossibility contemplated by section of the contract is not confined to something which is not humanely possible. Supervening impossibility or illegality involving action contrary to law or public policy. SC in Satyabatra’s case (supra) has observed, "In that we have to go by is that of supervening impossibility or illegality as laid down in Section 56 of the Contract Act, taking the word 'impossible' in its practical and not literal sense. What would not constitute ground of impossibility: Various decisions which have identified certain situations as not constituting grounds of impossibility – This is called “Doctrine or Supervening Impossibility”. We try our level best to avoid any misinformation or abusive content. The doctrine of frustration incorporated under section 56 of the Indian contract act provides a way out to the party when the performances has becomes impossible owing to any supervening events without their fault. The doctrine of frustration paves the way for a just consequence of such an unfortunate event which has happened without any fault of the contracting parties. Section 56 of the Indian Contract Act lays down: “An agreement to do an impossible act is void”. The doctrine of frustration incorporated under section 56 of the Indian contract act provides a way out to the party when the performances has becomes impossible owing to any supervening events without their fault. © Conventus Law 2020 All Rights Reserved. Under what circumstances the doctrine of Supervening ... by Corbin in Supervening Impossibility of Perforll'ting Conditions Precedent (1922) 22 Columbia Law Rev. This principal has been upheld in Satyabrata Ghose’s case (supra), Inder Pershad versus Campbell7 and other judgement of English Courts. The contract has therefore not been discharged by supervening impossibility. Unlike cancellation of contract, the frustration of contract not determined at the volition of the party. However, under Indian law, the statutory provision under Section 56 sets out a positive rule of law on supervening impossibility or illegality that renders performance impossible in its practical, and not literal sense. The second paragraph has the effect of turning into general rule, the limited exceptions under the English Law. The company attempted to rescind the contract on the ground of supervening impossibility.  In India, since Section 56 of the Contract Act, itself, embodies the doctrine of frustration, the controversy is fairly narrow. It enunciates the law relating to discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done. According to Para 2 of Section 56, which states that, “A contract to do an act which after the contract is made, becomes impossible, or by reasons of some event which the promisor could not prevent. Scope and applicability “An agreement to do an act impossible in itself is void.”. It basically means, a contract could not be executed because of such an event that was beyond the control of both the parties. Section 65 postulates that when an agreement is discovered to be void, such as in case of a contract getting frustrated, the person who has received any advantage under such agreement is ‘bound’ to restore it or to make compensation for it, from whom he received it. We hold, therefore, that the doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of section 56 of the Indian Contract Act. The Section is reproduced “An agreement to do an act impossible in itself is void”. Happening of event which rendered the contract impossible to performance but would not include hard and difficult case of abnormal rise or fair. It must be borne in mind, however, that Section 56 lays down a rule of positive law and does not leave the matter to be determined according to the intention of the parties". While enunciating the law laid down under section 56, Mukherjee J. explained that the first paragraph of section 56 is on the same lines as of Common Law, which discharges the obligation to perform because of inherent impossibility attached to it. Bar Council of India Shall pay Rs. Then such act which become impossible or unlawful to become void. 8 The Law of Contract by P C Markanda 2nd Edition 2008; Pg No 893 It leads to a pertinent question as to what is such impossible act that would lead to frustration of contract. The parties to such a contract are discharged. The  principle was based on the theory "that, in contracts in which the performance depends on the continued existence of a given person or thing, a condition is implied that the impossibility of performance arising from the perishing of the person or thing shall excuse the performance"4. Resulting in the obligation under the contract being radically different from those contemplated by the really an aspect or part the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the preview of section 56, Case law:- Satyabrata Ghosh v/s Mugneeram AIR (1954) S.C 44 (supreme court observed in regard this case was based on Templin steamship co. ltd v/s Anglo Mexican Petroleum product co. ltd). However, it cannot be entirely ruled out that the doctrine of frustration, as recognised in English law, does not come within the parameters of Section 56 of the Contract Act. The law governing the contracts is embodied in the Indian Contract Act, 1862 ("Contract Act"). In simple words, on the happening of an event which makes the contract impossible or unlawful, the contract stands determined and discharged. impossibility of act. The doctrine of frustration of contract is an aspect or part of the law of discharge of contract by reason of a supervening impossibility or illegality of the act agreed to be done. 1 Mr (Retd) Justice B K Mukherjea; Satyabrata Ghose versus Mugneeram Bangur& Co & Anr (AIR 1954 SC 44) 2 "An agreement to do an act impossible in itself is void. The performance of obligation under a may be hindered by unexpected supervening events leading to contractual uncertainties. It is of two types; 1. When frustration occurs, it avoids the contract itself and discharges both parties automatically8. Compensation for loss through non-performance of act known to be impossible or unlawful: Where one person has promised to be something which he knew or, with reasonable diligence, might have known, and which the promisee did not know to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise. This doctrine is treated as an expectation to the general rule which provides for compensation in case of breach of contract. The aspect of discharge of contract has to, therefore, be analysed within the contours of Section 56 of the Contract Act. GENESIS OF FRUSTRATION OF CONTRACT. Section 56 [2] is dealt with when matter is not determined to the intention of parties. For instance, an agreement to discover treasure by magic, because of its impossibility of performance, is void. but it is principal is not confined to physical impossibly. What is Restraining Order And How to Get A Restraining Order in India? factors and circumstances that the court consider while determining the applicability or non-applicability of section 56 has been dealt with in detail in this paper. The SC in Satyabrata Ghose’s case (supra) has held that the "doctrine of frustration of contract is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of Section 56 of the Indian Contract, Act". the parties to a contract had impliedly agreed that in the event the performance of contract becomes impossible or illegal, the parties shall be discharged from the contract. The performance of an act may be impracticable and useless from the point of view of the object and weather it form’s the biases of the contract rightfully has to be decided by the court. A frustration of contract is a contract that subsequent to its formation and without fault of either party is incapable of being performed due to an enforcement event. Doctrine of Supervening Impossibility. An agreement to do an act impossible in itself is void (S.56) Impossibility of performance of an act does not give or creat any obligation upon the parties to a contract. (1954) S. C. 44 and Alopi Prasad vs Union of India A.R. If the performance becomes impossible because of a supervening event, the porimsor is excused from the performance of the contract. Dispute Resolution - Commercial Litigation, Dispute Resolution - International Arbitration. The second paragraph has been in fertile source of litigation as the court has deliberated much on the interpretation of the word impossible. Further, on account of such impossibility, the whole contract becomes void when the act becomes impossible or unlawful. Another important aspect to check for the application of impossibility is that the foundation of the contract gets upset. Such agreements are inherently impossible to be performed and therefore, they are void ab initio. Outbreak of wear, war restrictions legally to trade enemy. unlawful becomes void when the act becomes impassible or … Physical impossibility is not a prerequisite as already discussed.  The concept of frustration of contract dates centuries back to the ‘Doctrine of Frustration’ and has, thereafter, evolved in the English Laws.  A party, however, taking justification under doctrine of frustration on the ground of the performance becoming impossible due to certain overturning events, in view of the aforesaid caveats in the Section 56 of the Contract Act, must reasonably show, in all bonafide, that the supervening impossibility is such that its performance has become impossible. 5000/- Stipend to New... What is Article 370? In satyabrata v/s mugneeram ( AIR  1954 S.C 44 ) the supreme court have observed that various theories have been propounded regarding the juridical basis of the doctrine of frustration yet the essential idea upon which the doctrine is based on that of the impossibility of performance and frustration are often interchangeable expression also meaning of the term impossible was explained under section 56. Sec 56 of the Indian Contract Act, 1956, enumerates on the “Doctrine of Frustration” of a contract. 474. Impossibility may be in law or in fact The doctrine of frustration is really an aspect or part of the law of discharge of contract by reason of supervening impossibility or illegality of the act agreed to be done and hence comes within the purview of section 56; Satyabrata Ghose v. Mugneeram Bangur, AIR 1954 SC 44. The BlackLaw Dictionary defines frustration in relation to contracts as the doctrine that if a party principal purpose is substantially frustrated by unanticipated changed circumstances that party duties are discharged and the contract is considered terminated also termed as the frustration of purpose. a) These is void contract between parties, b) Some part of contract is yet to be performed, d) That impossibility cannot prevent by any party. However, impossibility to perform arising subsequently to the agreement will not, as a rule, relieve the promisor from performing his part in all cases. 1960 S.C.588. Impossibility existing at the time of contract. If you found any in this website, please report us at info@lawcorner.in. 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