Discharge of Contract by Impossibility / Frustration

Introduction

Contracts may be discharged if performance becomes impossible due to unforeseen events or circumstances beyond the control of the parties. This is known as discharge by impossibility or frustration. Section 56 of the Indian Contract Act, 1872, governs this doctrine in India.

Meaning / Definition

Section 56 declares that an agreement to do an act which is impossible in itself is void. It also covers contracts that become impossible or unlawful after their formation. Such impossibility may release parties from performing obligations without liability for non-performance.

Frustration occurs when performance becomes impossible due to circumstances beyond a party’s control and not caused by their own fault.

Modes / Types of Impossibility or Frustration

Initial Impossibility

• Agreement to perform an act impossible in itself is void from the beginning.
• Example: A promises to build a structure on land that does not exist. The contract is void.

Subsequent Impossibility / Frustration

• Occurs after formation of contract.
• Conditions for frustration:
  • Act becomes impossible after contract formation.
  • Impossibility caused by events beyond promisor’s control.
  • Impossibility not caused by promisor’s own fault.
• Also termed doctrine of frustration.

Grounds for Frustration

• Destruction of Subject Matter:
  • Performance impossible if subject matter ceases to exist.
  • Example: Taylor v Caldwell – destruction of music hall frustrated contract.
• Change of Circumstances:
  • Performance by a specific individual may be impossible if that person becomes unavailable.
  • Ordinary changes (e.g., staff shortage) may not frustrate contract.
• Non-Occurrence of Contemplated Event:
  • Contract purpose destroyed due to non-occurrence of an event essential to contract.
  • Example: Krell v Henry – coronation procession cancelled, contract frustrated.
• Death or Incapacity of Parties:
  • Party excused if contract depends on specific individual who dies or becomes ill.
  • Example: Robinson v Davison – pianist unable to perform due to illness.
• Government / Legislative Intervention:
  • Law or administrative order preventing performance can frustrate contract.
  • Example: Metropolitan Water Board v Dick Kerr – work stopped by government order.
• Intervention of War:
  • War or conflict may frustrate contract if it makes performance impossible.
  • Alternate routes or means to perform prevent application of frustration doctrine.

Important Case Law

• Taylor v Caldwell (1863): Music hall destroyed; contract frustrated.
• Krell v Henry (1903): Coronation procession cancelled; contract frustrated.
• Robinson v Davison (1871): Pianist incapacitated; contract frustrated.
• Metropolitan Water Board v Dick Kerr & Co Ltd: Government order prevented performance; contract frustrated.

Effects of Frustration

• Self-Induced Frustration Not Allowed: Party cannot claim frustration if caused by their own act.
• Partial Frustration: Frustration applies only to affected portion of contract.
  • Example: Crop failure reduces quantity deliverable; sale of available crop is valid.
• Adjustment of Rights (Section 65): Benefits already received may need restitution.
  • Example: Singer paid for performances already completed even if remaining contract frustrated.

Practical Example

• A singer contracts to perform 10 shows at a theatre. After 7 shows, theatre burns down. Contract is frustrated; singer paid for 7 shows performed. Remaining performances excused.

Summary

• Section 56 governs discharge by impossibility and frustration.
• Initial impossibility renders contract void from beginning.
• Subsequent impossibility (frustration) occurs due to unforeseen events beyond control.
• Grounds include destruction of subject matter, incapacity, non-occurrence of contemplated event, government intervention, or war.
• Frustration must not be self-induced.
• Partial frustration only affects impossible portion; prior performance or benefits are adjusted.