Model Answer
0 min readIntroduction
The Indian Contract Act, 1872, governs the enforceability of agreements in India. However, unforeseen events can sometimes render contractual obligations impossible to perform. The doctrines of ‘supervening impossibility’ and ‘frustration of contract’ address such situations, providing legal recourse to parties unable to fulfill their commitments due to circumstances beyond their control. These doctrines are rooted in the principle that a contract is based on the assumption that the circumstances in which it was made will remain substantially the same. When these circumstances radically change, the contract may be discharged.
Supervening Impossibility
Supervening impossibility refers to the impossibility of performing a contract that arises *after* the contract has been entered into, due to an unforeseen event or change in circumstances. This impossibility must be of such a nature that performance becomes objectively impossible, not merely more difficult or expensive. Section 56 of the Indian Contract Act, 1872, deals with this concept.
- Conditions for applying supervening impossibility:
- The impossibility must be unforeseen.
- The event causing impossibility must not be the fault of the promisor.
- The impossibility must render performance objectively impossible, not merely more onerous.
Frustration of Contract
Frustration of contract is a broader doctrine than supervening impossibility. It occurs when an event fundamentally alters the nature of the contractual obligations, rendering the contract radically different from what the parties originally intended. It’s a subset of supervening impossibility, but focuses more on the change in the *nature* of the obligation rather than pure impossibility.
- Conditions for frustration of contract:
- A supervening event occurs which neither party anticipated.
- The event fundamentally alters the nature of the performance.
- The event renders performance radically different from what was originally contemplated.
- The event is not self-induced by the party seeking to rely on frustration.
Distinction between Supervening Impossibility and Frustration
While often used interchangeably, there's a subtle difference. Supervening impossibility focuses on the *physical* or *legal* impossibility of performance. Frustration focuses on the *commercial* or *fundamental* change in the nature of the performance.
| Feature | Supervening Impossibility | Frustration of Contract |
|---|---|---|
| Focus | Objective impossibility of performance | Radical change in the nature of performance |
| Scope | Narrower | Broader |
| Example | Destruction of the subject matter | Cancellation of an event for which a venue was booked |
Decided Cases
Satyabrata Ghose v Mugneeram Bangur & Co (1954 AIR 410, 1954 SCR 316)
This landmark case established the doctrine of frustration in India. The contract involved the supply of jute bags. Due to the partition of India, the supplying factory fell within Pakistan. The court held that the contract was frustrated as the source of supply had become unavailable due to unforeseen political events. The court emphasized that frustration occurs when a supervening event renders performance radically different from what was originally contemplated.
Kalyani v. State of Andhra Pradesh (AIR 1972 AP 168)
The Andhra Pradesh High Court held that the change in government policy, specifically the abolition of a particular system of licenses, constituted frustration of contract, as it rendered the performance of the contract impossible. This case demonstrates that changes in law can also lead to frustration.
Avtar Singh v. Sales Tax Officer (AIR 1969 SC 228)
The Supreme Court held that the introduction of a new sales tax law, which increased the tax burden significantly, did not frustrate a contract for the sale of goods. The court reasoned that the increased tax burden merely made the contract more onerous, but did not render performance radically different.
Energy Watchdog v. Central Electricity Regulatory Commission (2017 SCC OnLine SC 1198)
The Supreme Court reiterated the principles of frustration of contract, emphasizing that the event must be unforeseen and render performance radically different. The court also clarified that mere hardship or increased cost is not sufficient to invoke the doctrine of frustration.
Conclusion
The doctrines of supervening impossibility and frustration of contract are vital safeguards in contract law, providing relief to parties when unforeseen events render performance impossible or radically different. While closely related, frustration encompasses a broader range of circumstances than supervening impossibility. The application of these doctrines requires a careful examination of the specific facts and circumstances of each case, considering the principles established by landmark judgments like <i>Satyabrata Ghose</i> and subsequent interpretations by the Supreme Court. Understanding these nuances is crucial for both drafting and enforcing contracts in a dynamic legal and economic environment.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.