frustration

Section 56 of the Indian Contract Act provides that a contract to do an act which, after it is made, becomes impossible or unlawful through an event the promisor could not prevent, becomes void when the act becomes impossible or unlawful. The second paragraph is the statutory basis of frustration in India.

In Satyabrata Ghose (1953) the Supreme Court held that “impossible” is not used in a literal sense: performance becomes impossible when an untoward event upsets the very foundation of the contract and makes it useless for its object. The Court also held that s.56 is a positive rule, so Indian courts need not rely on the English theory of an implied term. Frustration must not be self-induced, and mere hardship or higher cost does not frustrate a contract. Money paid can be recovered under s.65.

Example

When the hall booked for a wedding was destroyed by fire, the contract was discharged by frustration under s.56 and the advance was refundable under s.65.

In Indian law

• Sections 56 and 65, Indian Contract Act, 1872
• Satyabrata Ghose v. Mugneeram Bangur & Co., 1953 INSC 71

See also

force majeure · lex non cogit ad impossibilia · void agreement · restitution

Read more in the study notes

• Frustration and impossibility of performance (Contract I)
• Acceptance and rejection of goods, the unpaid seller, and frustration (International Trade Economics)
• Agreement and contract: meaning, essentials and kinds (Contract I)
• Discharge by agreement and by operation of law (Contract I)
• Breach of contract: anticipatory and actual (Contract I)
• Counselling and managerial appraisal (Human Resource Management)