Frustration of Contract

In negotiations and contracts between parties, the word frustration is frequently used to signify defeat or frustration in general. An unsuccessful transaction that was unable to be completed for some reason has caused frustration. One of the most prevalent solutions to broken contracts has been the inclusion of the theory of frustration in contract law.

What does Frustration of Contract Define?

Frustration of contract is a legal doctrine in which a contract is deemed to be discharged (or terminated) before its agreed time (may be) because the circumstances in which it was made have changed so dramatically (such as change in law, natural event, etc.) that the object of the agreement is destroyed. The doctrine of frustration applies where an event occurs that is so fundamental as to be regarded as striking at the root of the contractual agreement, rendering it physically or commercially impossible to fulfill the contract. Or it may transform the obligations under the contract into something so fundamentally different from what was agreed to that it became unjust to enforce the contract.

Legal History

Roman law is where the doctrine of contract frustration got its start. Roman contract law made the very first reference to it in the case of Paradine v. Jane, where the parties were released because the object had been destroyed or the contract's purpose could no longer be fulfilled.

Case facts

Paradine filed a rent lawsuit against Jane. The defendant contended that because the German prince had seized possession of the area where the property was located, he was not permitted to use the property for commercial purposes. When he would have made a profit from using this property, he had intended to rent it out.

Since there was no room for exception in the contract, the defense was not held accountable. The defendant's justification, however, was solid and reasonable. He was unable to change the situation because the judge believed that contractual obligations should always be upheld.

However, the doctrine of frustration was formally recognized in Taylor v Caldwell case that alleviated the potential harshness of previous decisions.

The above-mentioned cases have given rise to the doctrine of frustration. The strictness of English law was judged to be useless and unjust in numerous cases where the contract was impossible to carry out without the defendant's fault. As a result, an exception to this rule was necessary. In order to address the impossibility of the situation, the doctrine of frustration was adopted into contract law (the Law Reform (Frustrated Contracts) Act 1943 of the United Kingdom).

Doctrine of Frustration of Contract in Indian Law

Though the term frustration of contract nowhere mentioned in the Indian contract act; however, Section 56 of the Indian Contract Act of 1872 discusses similar provision and makes an exception to this general rule. Parties who breach a contract must compensate for their actions. According to this doctrine, in the event that a contract is broken, the promisor is released from all liability and the agreement is ruled worthless.

Conclusion

When an improbable event occurs that makes it impossible to carry out the terms of the contract, the doctrine of frustration enters the picture. The failure of the contract renders it invalid and absolves the parties of any responsibility. This doctrine is an exception to the regular rules of contract law regarding how to compensate for a breach of contract when the contract is not often performed. However, when the doctrine of frustration is applied, the parties to the contract are not at fault and should not be required to make up the difference.

FAQs

Q1. What exactly is "contract frustration"?

Ans. According to the doctrine of frustration, frustration happens when an unexpected circumstance makes it impossible or significantly different from what the parties had originally intended for a contract to be performed. No one is thought to be to blame.

Q2. What are some instances of a contract being frustrated?

Ans. The destruction of the topic Let's say I agree to sell you my house, but it later catches fire. the absence of a party because of a death, illness, or other unusual circumstances. For instance, the lead singer of a well-known band that you hired to play at your party becomes ill and is unable to do so.

Q3. What consequences does frustration have legally?

Ans. Frustration arises anytime the law finds that, absent a default on the part of either party, a contractual obligation is no longer capable of being fulfilled since to do so would require drastically departing from what the contract asked for.

Q4. What conditions permit a contract to be frustrated?

Ans. A common law process by which a contract may be discharged or canceled is called "frustration of contracts." In contract law, frustration occurs when a supervening event that was not the fault of any party frustrates or makes difficult the fulfillment of a contract.

Q5. What conditions permit a contract to be frustrated?

Ans. A common law process by which a contract may be discharged or canceled is called "frustration of contracts." In terms of contract law, frustration occurs when a supervening incident that was not the fault of any party frustrates or makes difficult the fulfillment of a contract.

Q6. What is the primary attribute of contract frustration?

Ans. When an employee, by no fault of their own, is unable to carry out the essential obligations and responsibilities of their position, the employment contract is breached. In most cases, it is unpredictable how the frustration came about.