CONTRACTS AND LEGAL METHODS AND

REASONING PROJECT

Topic: Doctrine and grounds of

supervening impossibility in INDIA

SUBMITTED BY:
 Munavvarah (20191BAL0104)

SUBMITTED TO:

Prof.Sneha Mula and Prof. Sundeep

 ACKNOWLEGEMENT

I would like to express my special thanks of gratitude to our

teachers ie., Prof.Sneha Mula and Prof.Sundeep who gave me the
golden opportunity to do this wonderful project on the topic
“Doctrine and grounds of supervening impossibility in INDIA”
which also helped me in doing a lot of research and I have come to
know about so many new things.
 TABLE OF CONTENT

Acknowledgement....................................................................1
Table of content.......................................................................2
Synopsis..................................................................................3
Introduction.............................................................................4
Literature review......................................................................5
Research methodology..............................................................6
Content....................................................................................7
Bibliography.............................................................................
 SYNOPSIS

This project covers the core concept of impossibility with suitable

cases and references. It is made as simple as possible to provide an
easy ground in order to reduce intricacies of the respective subjects.
The whole world of impossibility starts with the section 56 of Indian
Contract Act,1872 followed by frustrations and its exception.
 INTRODUCTION

Objective of the Study:

The objective of the study is to look for concepts and cases in unfair
supervening impossibility in India and how they can be related to section 56 of
the ICA.

Scope of Study:
The scope of study focuses on impossibilities with specific reference
frustration. The study also covers several cases related to it.

Significance of the Scope of Study:

The study is very significant as it deals with contracts in which has wide range
of impact in the law system of India.

1
Indian Contract Act,1872.
 LITERATURE REVIEW

The referred materials are mainly section 56 which starts to be

starting point of the core concepts. Frustration when applicable and
not are taken into more concerns through addressing various cases
and its judgement.
Observation of thinkers and its due connect to the subject are
mentioned for the sake of concept clarity.
 RESEARCH METHODOLOGY

What research method has been occupied?

This study is a descriptive study. Descriptive research aims to accurately and
systematically describe a situation or phenomenon. It can answer what, when,
where, when and how questions, but not why questions.
A descriptive research design can use a wide variety of quantitative and
qualitative methods to investigate one or more variables. Unlike in
experimental research, the researcher does not control or manipulate any of
the variables, but only observes and measures them.

Hypothesis:
It is difficult to draw a clean line between English law and Indian law.

Tools and techniques:

Case study and published data has been used as a tool for data collection. A
case study is usually an in-depth description of a process, experience, or
structure at a single institution. Published data are Government Publication,
Publication of international organization, Semi Official Publication, Reports of
Committees and Commissions, Private Publications such as Journal and
newspaper, research institutions, Professional trade bodies, research articles,
reviews and reports.

Source of data collection:

Secondary sources of data collection are used in this project. Secondary data is
the data acquired from optional sources like magazines, books, documents,
journals, reports, the web and more.
IMPOSSIBILITY OF PERFORMANCE AND FRUSTRATION

Section 56 first lays down the simple principle that "an agreement to do an act
impossible in itself is void". For example, an agreement to discover a treasure
by magic, being impossible of performance, is void. The second paragraph of
Section 56 lays down the effect of subsequent impossibility of performance.
Sometimes the performance of a contract is quite possible when it is made, but
some event subsequently happens which renders its performance impossible or
unlawful. In either case the contract becomes void. Where, for example, after
making a contract of marriage, one of the parties goes mad, or where a contract
is made for the import of goods and the import is thereafter forbidden by a
Government Order, or where a singer contracts to sing and becomes too ill to
do so, the contract in each case becomes void.
Indian Contract Act 1972 provides Legal Provisions as follows :-
56. Agreement to do impossible act.—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. Compensation for
loss through non-performance of act known to be impossible or unlawful.—Where
one person has promised to do 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.
Illustrations:
(a) A agrees with B to discover treasure by magic. The agreement is void.
(b) A and B contract to marry each other. Before the time fixed for the
marriage, A goes mad. The contract becomes void.
(c) A contracts to marry B, being already married to C and being forbidden by
the law to which he is subject to practice polygamy. A must make
compensation to B for the loss caused to her by the non-performance of the
promise.
(d) A contracts to take in cargo for B at a foreign port. A’s Government
Afterwards declares war against the country in which the port is situated. The
contract Becomes void when war is declared.
(e) A contracts to act at the theatre for six months in consideration of a Sum
paid in advance by B. On several occasions A is too ill to act. The contract to
act On those occasions becomes void.

In the case of Taylor v Caldwell, BLACKBURN J laid down that the above “rule
is Only applicable when the contract is positive and absolute, and not subject
to any Condition either express or implied”. In this case the defendants had
agreed to let the plaintiffs the use of their Music hall between certain dates for
the purpose of holding a concert there. But before The first day on which a
concert was to be given, the hall was destroyed by fire without The fault of
either party. The plaintiffs sued the defendants for their loss. It was, held That
the contract was not absolute, as its performance depended upon the
continued Existence of the hall. It was, therefore, “subject to an implied
condition that the parties Shall be excused in case, before breach, performance
becomes impossible by the Perishing of thing without default of the
contractor1’.With this decision began the Struggle between the two principles,
namely, the principle of sanctity of contract which Supports the principle of
absolute liability and the principle that a contract be Discharged when the
shared contractual assumption has been destroyed by change of
Circumstances.

Loss of Object or Frustration:

In this case the performance of the contract had become physically impossible
Because of the disappearance of the subject-matter. But the principle is not
confined To physical impossibilities. It extends also to cases where the
performance of the Contract is physically possible, but the object the parties
had in mind has failed to Materialize. The well-known coronation cases of
which Krell v Henry6” is one, Illustrates this. The defendant agreed 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
King’s 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. The taking place Of the procession
was, therefore, the foundation of the contract. The object of the Contract was
frustrated by non-happening of the coronation and the plaintiff was not
Entitled to recover the balance of the rent. Thus the doctrine of frustration
comes into Play in two types of situation, first, where the performance is
physically cut off, and, Second, where the object has failed. The Supreme Court
has held that Section 56 will Apply to both kinds of frustration2.

In Satyabrata Ghose v Mug-neeran Bangur & Co 3 : This much is clear that the
word ‘impossible’ has not been used here in the sense of physical or literal
impossibility. The performance of an act may not be literally impossible but it
may be impracticable And useless from the point of view of the object and
purpose which the parties had in View ; and if an untoward event or change of
circumstances totally upsets the very Foundation upon which the parties
rested their bargain, it can very well be said that The promisor finds it
impossible to do the act which he promised to do.
Explaining the Concept “frustration of the contract” in Cricklewood Property &
Investment Trust Ltd v Leighton’s Investment Trust Ltd, VISCOUNT SIMON LC
said that it means “the Occurrence of an intervening event or change of
circumstances so fundamental as to Be regarded by the law both as striking at
the root of the agreement, and as entirely Beyond what was contemplated by
the parties when they entered into the contract”. Similarly, Lord WRIGHT
observed71 that frustration means that a contract has ceased to Bind the
parties because the common basis on which by mutual understanding it was
Based has failed ; there has been a failure of what in the contemplation of both
parties Would be the essential condition or purpose of the performance.

Commercial Hardship:
The alteration of circumstances must be “such as to upset altogether the
Purpose of the contract. Some delay or some change is very common in all
human Affairs, and it cannot be supposed that any bargain has been made on
the tacit Condition that such a thing will not happen in any degree”. This
makes the court Rather cautious in discharging parties from their contract. An
illustration is Sachindra Nath v Gopal Chandra. The plaintiff let certain
premises to the defendant for a Restaurant at somewhat higher rent. The
defendant agreed to pay high rent because The British troops were stationed in
the town and a clause in the agreement specially Provided that ‘this agreement
will remain in force so long as British troops will remain In this town’. After
some months, the locality was declared out of bounds to the British Troops. It
2
BK MUKHERJEA’s observation
3
AIR 1954 SC 44:1954 SCR 310.
was held that though it was possible that the defendant would not have paid
Such a high rent apart from the expectation of deriving high profits from the
British Troops, that was not sufficient to make out a case of frustration. A
situation like this Has often been described as one of commercial hardship,
which may make the Performance unprofitable or more expensive or dilatory,
but is not sufficient to excuse Performance, for it does “not bring about a
fundamentally different situation such as To frustrate the venture”.
Such cases may not fall within the purview of Section 56 and This is amply
shown by the Privy Council decision in Harnandrai Fulchand v Pragdas. By a
contract in writing the plaintiffs bought of the defendants a number of Dhotis
to be manufactured by specified mills and to be delivered as and when the
Same may be received from the mills. The sellers delivered only part of the
goods Owing to the mills failing to perform their contract with the defendants
as they were Engaged in fulfilling certain Government contracts. The
defendants pleaded Frustration.
It was held that the bargain was not frustrated, as the stipulation as to delivery
did Not make delivery by the mills a condition precedent. It was a simple case
of breach. ‘ The closing or even the destruction of the mills would not affect a
contract between Third parties, which is in terms absolute.” Referring to the
words “as and when”, their Lordships held that the words certainly regulated
the manner of performance, but they Did not limit the sale of such goods as
the mills might deliver. The Supreme Court Acted on this principle in Ganga
Saran v Ram Charan Ram Copal. A contract was made For supplying certain
bales of cloth manufactured by the New Victoria Mills, Kanpur.
The contract added : ‘We shall go on supplying goods to you of the Victoria
Mills As soon as they are supplied to us by the said mills.’ The mill failed to
supply the Goods to the sellers and, therefore, the sellers pleaded frustration.
But they were held Liable. The words “prepared by the mills” are only a
description of the goods to be Supplied, and the expression “as soon as they
are prepared” and “as soon as they are Supplied to us by the said mills”,
simply indicate the process of delivery.
Another illustration is Samuel Fitz & Co v Standard Cotton Co. The defendants
placed an order with the plaintiffs for the supply of Tapestries of certain kind,
making it clear that they intended to sell them in Australia. But the Australian
Government prohibited the import of such goods. The defendants lost their
market and cancelled their order. It was held that the courts should not read
into a contract an implied term that the Enforceability of the contract was
dependent upon the ability of the purchaser to find Customers for the goods.
“We are unable to say that the foundation of the contract was That these goods
should be resold by defendants to their clients in Australia. ”A contract by a
Hindu father to give his daughter in marriage to the plaintiff Was held to be not
frustrated simply because the girl had expressed her unwillingness To marry
the plaintiff. The defendant had to pay damages for the breach. Where the
Performance of a contract for the sale of grain was made more difficult by
Government Restrictions on sale and storage imposed subsequently ; a
franchise given by an Authority to a contractor of (he right to collect tolls at the
ghats of a bridge and the Government subsequently prohibited the traffic of
food grains over the bridge resulting In loss to the plaintiff ;the temporary
suspension of traffic on a bridge owing to Breakdown ;failure to supply the
contracted quantity in assorted variety of Eucalyptus firewood owing to the
forest, which was under the supplier’s lease, not Helping him with the requisite
quantity aggravated further by shortage of labour and Transport facility in the
area, all these being things which the supplier should have Assessed before
giving commitments, in all these cases the performance was held not To have
become impossible. “Disappointed expectations do not lead to frustrated
Contracts.”

Specific grounds of frustration:

The principle of frustration of contract or of impossibility of performance is
Applicable to a great variety of contracts. It is not possible to lay down an
exhaustive List of situations in which the doctrine is going to be applied so as
to excuse performance. The law upon the matter is undoubtedly in process of
evolution. Yet the Following grounds of frustration have become well
established.

1. Destruction of Subject-Matter:
The doctrine of impossibility applies with full force “where the actual and
Specific subject-matter of the contract has ceased to exist”. ‘”Taylor v CaldwelP
is the Best example of this class.” There, a promise to let out a music hall was
held to have Frustrated on the destruction of the hall. Similarly, where the
defendant contracted to Sell a specified quantity of potatoes to be grown on his
farms, but failed to supply Them as the crop was destroyed by a disease, it was
held that performance had Become impossible. The defence of frustration
failed.

2. 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”. This Happens when the change of circumstances has affected
the performance of the Contract to such an extent as to make it virtually
impossible or even extremely difficult Or hazardous.
A contracted to supply to B certain classes and quantities of American Piece-
goods. The contract was c.i.f. 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 go to
Karachi. It was held that the contract was frustrated, because the arbitrator
could proceed Without the parties’ presence.

3. Non-occurrence of Contemplated Event:

Sometimes the performance of a contract remains entirely possible, but owing
To the non-occurrence of an event contemplated by both parties as the reason
for the Contract, the value of the performance is destroyed. Krell v Henry1
involved a situation Of this kind. There, a contract to hire a room to view a
proposed coronation procession Was held to have frustrated when the
procession was postponed. For this result to Follow it is necessary that the
happening of the event should be the foundation of the Contract.

This is shown by Berne Bay Steam Boat Co v Hutton which also arose from The
postponement of the coronation. The Royal Naval Review was proposed to be
held On the occasion. The defendant chartered a steamboat for two days “to
take out a Party of paying passengers for the purpose of viewing the naval
review and for a day’s Cruise round the fleet”. But the review was cancelled
and the defendant had no use of The ship. Yet he was held liable to pay the
unpaid balance of the hire less the profit Which the plaintiff had made by the
use of the ship in the ordinary course. The court Said that the contract does
not differ from a case where, for instance, a person has Engaged a brake to
take himself and a party to Epsom to see the races there, but for Some reason
or other, such as the spread of an infectious disease, the races are Postponed.
 4. Death or Incapacity of Party:
“A party to a contract is excused from performance if it depends upon the
Existence of a given person, if that person perishes” or becomes too ill to
perform. Where the nature or terms of a contract require personal performance
by the promisor, his death or incapacity puts an end to the contract. Robinson
v Davison is

The well-known illustration :

There was a contract between the plaintiff and the defendant’s wife, who Was
an eminent pianist, that she should play the piano at a concert to be given by
the Plaintiff on a specified day. On the morning of the day in question she
informed the Plaintiff that she was too ill to attend the concert. The concert had
to be postponed And the plaintiff lost a sum of money. The plaintiffs action for
breach of contract failed. The court said that under the Circumstances she was
not merely excused from playing, but she was also not at Liberty to play, if she
was unfit to do so. The contract was clearly subject to the Condition of her
being well enough to perform. Similarly, where a 16 years old boy was engaged
for five years to perform as a Drummer for all the seven nights in a week
whenever the band had business and, on Account of illness, he was certified to
be able to perform only 4 nights, the contract Was held to have been frustrated.

5. Government or Legislative Intervention:

A contract will be dissolved when legislative or “administrative intervention
has So directly operated upon the fulfilment of the contract for a specific work
as to Transform the contemplated conditions of performance”. Where a vendor
of land could Not execute the sale deed because he ceased to be the owner by
operation of law, it Was held that the contract had become impossible of
performance. A contract by the
State to give a monopoly was held to have become void on the enforcement of
the Constitution. A contract between certain parties for the sale of the trees of
a forest was Discharged when the State of Rajasthan forbade the cutting of
trees in the area.

6. Intervention of War:
 Intervention of war or warlike conditions in the performance of a contract has
Often created difficult questions. The closure of the Suez Canal following the
Anglo-French war with Egypt, for instance, interrupted the performance of
many contracts.
One such case is Tsakiroglou & Co Ltd v Noblee Thorl G m b H. The appellants
agreed to sell to the respondents three hundred tons of Sudan Groundnuts
c.i.f. Hamburg. The usual and normal route at the date of the contract Was via
Suez Canal. Shipment was to be in November/December 1956, but on
November 2, 1956, the canal was closed to traffic and it was not reopened until
the Following April. It is stated that the appellants could have transported the
goods via The Cape of Good Hope. The appellants refused to ship goods via the
Cape. The Question now is whether by reason of the closing of the Suez route,
the contract had Been ended by frustration. The appellants’ argument was that
it was an implied term Of the contract that shipment should be via Suez. But it
was held that such a term Could not be implied. The customary or usual route
via the Suez Canal being closed, The appellants were bound [by the Sale of
Goods Act, 1893, 32(2)] to ship the groundnuts by a reasonable and practical
route and, though the appellants might be Put to greater expense by shipping
the groundnuts via the Cape of Good Hope, that Did not render the contract
fundamentally or radically different, and there was not. Therefore, frustration
of the contract. If the intervention of war is due to the delay Caused by the
negligence of a party, the principle of frustration cannot be relied upon. If there
are more than one ways of performing a contract and the war cuts off only one
Of them, the party is still bound to perform by the other way, however
inconvenient Or expensive.

7. Application to Leases:
In the leading case of Cricklewood Property & Investment Trust Ltd v
Leighton‘s Investment Trust Ltd : A building lease was executed for ninety-nine
years, more rent being Payable after erection of buildings. But, before any
could be erected and while the Lease had still 90 years to run, building activity
was suspended by the Government Because of the war. VISCOUNT SIMON LC
said : “The lease at the time had more than Ninety years to run, and though we
do not know how long the present war, and the Emergency regulations which
have been made necessary by it, are going to fast, the Length of the
interruption so caused is presumably a small fraction of the whole term. Here,
the lease itself contemplates that rent may be payable although no building is
going on, and I cannot regard the interruption which has arisen as such as to
destroy The identity of the arrangement or to make it unreasonable to carry out
the lease according to its terms as soon as the interruption in building is over.”
His Lordship was not prepared to accept the view that frustration does not
Apply to leases. Where the subject-matter of the lease is swallowed by some
vast concussion of nature or buried in the depth of the sea, or that legislation
were subsequently passed which permanently prohibited private building in
the area, or Dedicated it as an open space forever, why should this not bring to
an end the Currency of a building lease, the object of which is to provide for the
erection on the Area, for the combined advantage of the lessor and lessee,
buildings which it would Now be unlawful to construct.
 BIBILIOGRAPHY

1.Contracts and specific relief by Avatar Singh.

2.Frustration pdf by Gaurav.