The Rights of the Deceased: Moral Rights Incidental to Copyright Law
- Vanshika Agrawal
- 2024-04-25
Contents hide
1 The Doctrine of Frustration & its Applicability in times of COVID-191.2 The Doctrine of Frustration & its Applicability in times of COVID-19
1.3 Introduction1.3.2 Description of Section 56 of Indian Contract Act, 1872(Force Majeure)
1.3.3 What are the conditions required to prove the frustration of the contract?
1.3.4 What are the grounds for the Doctrine of Frustration?
1.3.5 What is the effect of the doctrine of Frustration?
1.3.6 Applicability of Doctrine of Frustration in times of COVID-19
In American Law, it is the Theory of Impossibility and Impracticability and in English Law, it is the Frustration of Contract and Frustration of Purpose under the Doctrine of Frustration and under Indian Legal System it is covered under section 56 of the Indian Contract Act 1872.
In general rule parties involved in contracts are liable to perform his parts and in case of breach, party breaching is liable to compensate for the same, But Section 56 of Indian contract act 1872 is exception to this general rule and deals with Doctrine of frustration as being act has not been performed. Under this concept of doctrine of frustration a promisor is relieved from any of liability under a contract in the event of the breach of contract and contract will be deemed to be void.
1st time it was seen in the Roman Contract law in the case of Paradine vs Jane[1] where the parties discharged because the thing has been destroyed and the purpose of the contract has become impossible to perform.
Facts of the case: Jane was sued for rent due to Paradine. The defendant argued that the German Prince had invaded the area where the property was situated; therefore he couldn’t use the property to make any profits. He had planned to pay the rent out of the profits which he will make after using of this property.
The defence was not held valid; as the obligation under the contract was completely absolute with no exception whatsoever. Though the defendant’s reason was a reasonable and strong one- he couldn’t have done anything with this situation- the Judge held that responsibility under the contract should be honoured under all circumstances and contract has become frustrated.
The origin of the doctrine can be traced back to the Queen’s Bench judgment in the case of Taylor v Caldwell[2] in 1863 in England.
The Doctrine of frustration has been evolved as a response to the aforementioned doctrine. There were cases in which contract couldn’t be performed through no mistake of the defendant, and the rigidity of the English rule for compensation on breach of contract was found to be unreasonable, unfair, hence an exception to this rule was necessary. The doctrine of Frustration was incorporated in the contract law as a remedy to the above situation.
Major Indian Case Related to Doctrine of Frustration:
Satyabrata Ghose v Mugneeram Bangur and Company & Co.[3]
Held: The court stated that the defendant’s suit stating that the ‘’impossibility’’ under Section 56(Agreement to do impossible to perform) doesn’t mean in the physical or literal means. It refers to a change in the situation which completely upsets the very foundation upon which the parties rested their bargain. The requisition orders, it must be noted that were temporary in nature. There was no timeline specified within which the project had to be completed. The absence of any deadline whatsoever in the contract, and when it was natural for some restrictions to be in effect during the war, thereby causing difficulties and delay in the project. This delay caused by the requisition order didn’t affect the fundamental objective or strike at the roots of the adventure.
Parshotam Das v. Municipal Committee, Batala[4]
The principle was applied by Teja Singh J of the Punjab High Court.
A municipal committee leased out few Tonga stands to the plaintiff for Rs.5000.But no one came forward to use the stand throughout the year and the plaintiff could not realize anything, He sued for the refund of his money.
It was held that “the plaintiff obtained the lease and committee granted the same to him on the assumption that the Tonga stands would be used by drivers and plaintiff will recover the fees from them, but drivers did not use the stands and doctrine of frustration applied with full force
Force Majeure and the doctrine of frustration: “Frustration is an English contract law doctrine that acts as a device to set aside contracts where an unforeseen event either renders contractual obligations impossible, or radically changes the party’s principal purpose for entering into the contract.
Force Majeure (S.56 of the Indian Contract Act, 1872.): A force majeure clause relieves one or both parties from liability to perform contract obligations when performance is prevented by an event or circumstance beyond the parties’ control. Typically force majeure events include fire, flood, civil unrest, or terrorist attack. Force majeure is a term used to describe a “superior force” event. The purpose of a force majeure clause is two-fold: it distributes risk and puts the parties on notice of events that may suspend or excuse service.
The doctrine of frustration (S.56 of the Indian Contract Act, 1872.): The essential to perform idea upon which the doctrine of frustration of contract is based is that of the impossibility of performance of the contract; in fact, ‘impossibility’ and ‘frustration’ are often used as interchangeable expressions. The changed circumstances, it is said, make the performance of the contract impossible, and the parties are absolved from the further performance of it as they did not promise to perform an impossibility.
The frustration of contract can be proved upon the fulfillment of the following conditions-
The impossibility has occurred due to event impossible to perform by both parties
Non-occurrence of Contemplated Event: There are so many times when the performance of the contract is possible but only specific events will occur, if not then the contract will be impossible or unattainable.
Herne Bay Steam Boat Co v.Hutton[5]
Howell v. Coupland [6]
.Robinson v. Davison[7]
Metropolitan Water Board v. Dick Kerr & Co. Ltd.[8]
.Pameshwari Das Mehra v.Ram Chand Om Prakash[9]
Tsakiorglou & Co. Ltd v. Noblee & Thorl GMBH[10]
The contract is frustrated automatically–After the occurrence of the frustrating events contract will be void automatically. The obligations of the parties involved get terminated immediately after the contract has been frustrated.
Further obligations are discharged- Both the parties are discharged from any obligations after the contract is said to be frustrated.
Accrued obligations- The legal rights or obligations already accrued before the frustrating event occurred are left undisturbed.
Covid-19 or corona virus was declared as pandemic on March 11, 2020.It led lockdown and financial slowdown across the country and in all sectors. Impact of this pandemic was severe and was increasing day by day and Doctrine of Frustration has played a major role because due to financial slowdown and lockdown suppliers were not able to perform their contractual obligations. Suppliers are seeking a delay to perform their contractual obligation to avoid compensation.
On February 19, 2020, the Department of Expenditure, Procurement policy division, Ministry of Finance issued an office memorandum with respect to the ‘Manual for Procurement of Goods, 2017’ which serves as the dictum for procurement by the Government of India.
This memorandum, in essence, stated that covid-19 could effectively cover under the Doctrine of frustration clause because it is a natural calamity and beyond the possibility to perform the contractual liability.
The doctrine of frustration comes into play when an unforeseeable event occurs and rendering the performance of the contract becomes impossible. The frustration of the contract makes the contract void and it also discharges the parties from any liability. This doctrine is an exception to the general principles of a contract under when compensation will be given for breach of contract. But when the doctrine of frustration is applied there is no fault of the parties involved in the contract and therefore, the parties should not be made liable to compensate for the loss that occurred.
[1] King’s Bench,(1647) Alyen 26:82ER897
[2] (1863)3 B&S 826:122 ER 309
[3] AIR 1954 SC 44:1954 SCR 310
[4] AIR 1949 East Punjab 301,304
[5] 13-(1903)2KB 683L1900-03)AII ER Rep 627(CA)
[6] (1876)1 QBD 258:(1874-80) AII ER Rep 878 (CA)
[7] (1871) LR 6 Exch 269:40 LJ Ex 172:24 LT 755:(1861-73)AII ER Rep 699
[8] 1962 AC 93L1961)2 AII ER 179:(1961)2 WLR 633
[9] -AIR 1952 Punj 34,38
[10] 1962 AC 93L1961)2 AII ER 179:(1961)2 WLR 633
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