INTRODUCTION
Section 56 of the Indian Contract Act, 1872, which goes as follows:
“56. Agreement to do impossible act.—An agreement to do an act impossible in itself is void.
Contract to do an 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.”1
is based on the doctrine of frustration. According to this doctrine, a contract is rendered void
if, after it is formed, an unforeseen event occurs that either makes the performance impossible,
unlawful, or fundamentally alters the nature of the agreement from what the parties initially
intended. Understanding this doctrine is crucial for grasping the legal ramifications when
unexpected circumstances prevent contractual duties from being carried out. Another concept,
although not defined by the Act, that overlaps with the doctrine of frustration is that of Force
Majeure.
In the case of Taylor v. Caldwell2, the defendants had agreed to allow the plaintiffs to use their
music hall on specific dates to host concerts. However, before the first scheduled event, the
hall was accidentally destroyed by fire, without fault from either party. The plaintiffs filed a
suit seeking compensation for their loss. The court ruled that the contract was not
unconditional, as its execution relied on the continued existence of the music hall. As such, it
1 The Indian Contract Act, 1872.
2 (1863) 3 B&S 826: 122 ER 309.
was bound by an implied condition that performance would be excused if the subject matter
ceased to exist without the contractor’s fault before breach. This case marked the beginning of
a tension between two key legal doctrines: the sanctity of contract, which emphasises absolute
liability, and the principle that contracts may be discharged if fundamental assumptions shared
by both parties are nullified due to unforeseen events. According to later judgments, such as in
Govindbhai Gordhanbhai Patel v. Gulam Abbas Mulla Alibhai3, a contract can only be voided
due to frustration if an unforeseeable event arises after the contract has been formed.
WHAT IS MEANT BY FRUSTRATION
The concept of “frustration of the contract” was explained in the case of Cricklewood Property
& Investment Trust Ltd V. Leighton’s Investment Trust Ltd4 by Viscount Simon LC in the
words:
“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”, and by Lord Wright in
the words:
“The word frustration is here used in a technical legal sense. It is a sort of shorthand: it means
that a contract has ceased to bind the parties because the common basis on which by mutual
understanding it was based has failed. It would be more accurate to say, not that the contract
has been frustrated, but that there has been a failure of what in the contemplation of both parties
would be the essential condition or purpose of the performance.”
Thus, frustration of contract occurs when, without fault of either party, an extraordinary and
unforeseeable event destroys the core purpose or foundation of the agreement, making further
performance unjust or impossible. When this happens, the law may discharge the parties from
3(1977) 3 SCC 179; CONTRACT & SPECIFIC RELIEF, Avtar Singh, 12th ed., pp. 392-423.
41945 AC 221 (HL); CONTRACT & SPECIFIC RELIEF, Avtar Singh, 12th ed., pp. 392-423.
their obligations, as continuing to enforce the contract would no longer reflect the original
intention of the parties.
GROUNDS OF FRUSTRATION
In the above-cited case of Taylor v. Caldwell5, the frustration of contract happened because the
performance of the Contract became physically impossible due to the disappearance of the
subject matter. However, the doctrine of frustration also extends to cases where the
performance of the contract is physically possible, but the object the parties had in mind has
failed to materialise. This was elucidated upon in the case of Krell v. Henry6 wherein the
defendant agreed to rent a flat from the plaintiff on June 26 and 27 to view King Edward VII’s
coronation procession, which was expected to pass along that street. Although the contract did
not explicitly mention the procession, both parties understood that viewing the event was the
essential purpose of the rental. When the coronation was cancelled due to the King’s illness,
the defendant refused to pay the remaining rent. The court held that the cancellation frustrated
the contract because the foundation of the agreement, the viewing of the procession, had failed.
Although performance (renting the flat) was still physically possible, the event that gave the
contract its commercial purpose did not occur. This case illustrates that frustration can apply
not only when performance becomes impossible, but also when the core objective of the
contract, shared by both parties, is defeated by an unforeseen event. In India too in the case of
Satyabrata Ghose v. Mugneeram Bangur & Co.7 the Supreme Court of India clarified the scope
of Section 56 of the Indian Contract Act, which deals with the impossibility of performance
and the doctrine of frustration. Justice B.K. Mukherjea observed that the term “impossible” in
Section 56 should not be interpreted narrowly as only referring to literal or physical
impossibility. Instead, he explained that a contract may be considered impossible to perform
not just when the act becomes physically unfeasible, but also when it becomes impracticable
or useless from the standpoint of the purpose or object the parties had in mind. If an unforeseen
event or change in circumstances completely destroys the foundation upon which the
agreement was made, the promisor may be excused from performing the act, as the contract is
5Ibid at 2.
6(1903) 2 KB 740 (CA).
7AIR 1954 SC44.
deemed frustrated. Thus, the Court recognised that Section 56 applies to both types of
frustration: one where performance becomes physically or legally impossible, and another
where the underlying purpose of the contract fails, making performance meaningless. This
broad interpretation ensures that the law reflects commercial reality and the true intentions of
the contracting parties.
Apart from these two important grounds, some other specific grounds are:
- Change of Circumstances: The Punjab High Court in Pameshwari Das Mehra v. Ram
Chand Om Prakash8 explained that frustration may occur when a completely
unanticipated change makes performance virtually impossible or hazardous, and where
neither party is at fault, the court may choose not to enforce the contract. However, not
all changes qualify; mere hardship, delay, or inconvenience is not enough. Similarly, in
Alopi Parshad & Sons v. Union of India9, the Supreme Court held that even though
wartime conditions changed economic realities, the contract was not frustrated as
performance (supply of ghee) still occurred. Courts have clarified that economic
hardship alone, such as a rise in prices, does not discharge a contract unless the change
is so extreme that performance becomes virtually impossible, as recognised in Tarapore
& Co. v. Cochin Shipyard Ltd.10 On the other hand, in Davis Contractors v. Fareham
UDC, delays due to bad weather and strikes made the contract more difficult and costly
but not radically different, so frustration did not apply. Similarly, in CTI Group v.
Transclear11, supplier’s refusal to provide goods did not excuse the seller, since delivery
remained possible and the seller was still responsible. Ultimately, frustration applies
only when performance becomes fundamentally different from what was agreed, not
just more burdensome or inconvenient. - Non-occurrence of contemplated event: Sometimes, a contract may become
frustrated not because performance is physically impossible, but because an expected
event, the core reason for making the contract, does not occur, thus destroying the value
of what was to be performed. A classic example is the case of Krell v. Henry12, where
8 AIR 1952Punj 34, 38.
9 AIR 1960SC 588.
10 (1984) 2 see 680.
11 (2008) Bus LR 1729.
12 Ibid at 6.
a room was hired specifically to view the coronation procession of King Edward VII.
When the procession was postponed due to the King’s illness, the court held that the
foundation of the contract had failed, even though using the room was still physically
possible. The central purpose, viewing the procession was no longer achievable, and
thus, the contract was frustrated. However, in Herne Bay Steam Boat Co v. Hutton13,
also related to the postponed coronation, the court reached a different conclusion. The
defendant had hired a steamboat to view the naval review and take a cruise, and
although the review was cancelled, the cruise could still occur. The court held that the
naval review was not the sole foundation of the contract. Therefore, frustration did not
apply, and the defendant had to pay. These cases show that for frustration to apply due
to non-occurrence of an event, that event must be the common and essential basis of
the agreement. If the event is merely one part of a broader purpose, the contract is likely
to remain enforceable. - Death or incapacity party: A contract that depends on the personal performance of a
specific individual can be discharged (or frustrated) if that person dies or becomes
seriously ill, making performance impossible. This principle is illustrated in Robinson
v Davison14, where a pianist’s illness on the day of a concert excused her from
performing, as her ability was central to the contract. Similarly, in Morgan v Manser, a
long-term employment contract was frustrated when the employee was called up for
military service, rendering him unable to fulfil his obligations. However, not all cases
of illness lead to frustration. In Marshall v Harland & Wolff Ltd15, an employee who
had been absent due to illness for nearly two years was not deemed to have frustrated
his contract because there was still a chance of recovery, and the employment
relationship was long-standing. Courts consider various factors in employment cases,
such as the length of illness, the nature of the job, and the terms of the contract.
Temporary or uncertain incapacity is generally not enough to discharge a contract
unless it becomes clear that future performance is impossible or fundamentally different
from what was originally agreed.
13 (1903) 2 KB 683 (CA).
14 (1871) LR 6 Exch 269.
15 (1972) 1 WLR 899.
Other important grounds are Government, administrative or legislative intervention directly
affecting the contract in such a way that it changes the very basis or conditions under which
the contract was originally made. This means that even though performance might still be
physically possible, the legal or regulatory environment has shifted so significantly that it alters
the core obligations or expectations of the parties. Other is the intervention of war, which often
renders the contract frustrated. However, the doctrine is not applicable in cases of commercial
hardships.
SCOPE OF THE DOCTRINE OF FRUSTRATION
The doctrine of frustration applies when, after a contract is formed, an unforeseen event
occurs—without the fault of either party—that makes performance impossible, illegal, or
radically different from what was originally agreed upon. Its scope is limited and applies only
in exceptional cases where continuing with the contract would be unjust due to the altered
circumstances. Frustration can occur due to physical impossibility (e.g., destruction of subject
matter), legal impossibility (e.g., government bans or war), or practical impossibility (e.g.,
failure of a foundational event). However, mere inconvenience, delay, or increased cost does
not amount to frustration. Courts interpret the doctrine strictly to prevent parties from using it
as an excuse to escape bad bargains. Thus, while it serves as a safeguard against injustice in
genuinely unforeseen and disruptive circumstances, the doctrine is not a general remedy for
commercial hardship or poor planning.
LIMITATION OF THE DOCTRINE OF FRUSTRATION
The doctrine of frustration does not apply simply because a contract has become more difficult,
unprofitable, or inconvenient to perform. Mere commercial hardship, such as a rise in prices,
shortage of materials, or increased cost of performance, does not qualify as frustration. Courts
maintain that such economic risks are a natural part of business, and parties are expected to
account for them when drafting contracts. For example, in Alopi Parshad v Union of India16,
the Supreme Court of India held that wartime inflation did not frustrate a supply contract.
When a contract is discharged due to frustration, neither party is considered to be at fault, and
no claim for damages or compensation arises from the failure to perform. Under most legal
systems (e.g., Section 56 of the Indian Contract Act), the contract becomes void automatically,
and parties may only recover benefits conferred prior to the frustrating event, if at all. The
doctrine is meant to release parties from further obligation, not to compensate for losses
suffered.
A party cannot claim frustration if the impossibility or radical change in circumstances was
caused by their own actions or decisions. This is known as self-induced frustration, and it
disqualifies the party from seeking relief under the doctrine. For example, if a seller fails to
procure goods due to a breach of contract with their own supplier, they cannot plead frustration
unless such procurement was legally impossible. The doctrine only protects parties from
external, uncontrollable events, not self-made failures.
CONCLUSION
In conclusion, the doctrine of frustration serves as an important legal mechanism to relieve
parties from their contractual obligations when an unforeseen event renders performance
impossible or fundamentally different from what was initially agreed upon. However, its
application is carefully limited to preserve the sanctity and enforceability of contracts. Courts
apply this doctrine with strict scrutiny and restrict its use to exceptional cases such as physical
impossibility, legal prohibitions, or the failure of a foundational event, not mere commercial
hardship or inconvenience. Moreover, frustration does not entitle either party to compensation,
and it cannot be invoked if the impossibility is self-induced. While the doctrine accommodates
circumstances beyond physical and mental bounds, it remains a narrow exception rather than
a general escape clause. This balanced approach ensures fairness while upholding the principle
that contracts must generally be performed as agreed.
16 Ibid at 9.
Article by: Medha Arora from Maharashtra National University(First Year)