Question

It is said that whenever parties’ bona fide contract without any duress or intimidation and they agree to specific contractual obligations they are bound by their decisions. Indeed, they cannot avoid their obligations for the fear of been in breach of contract.

However, there are unforeseen event which can undermines a party's principal purpose for entering into a contract, which makes performance of the contract is radically different from what was originally contemplated by both parties, which is referred to as frustration of the contract.

Please discuss this issue, clearly identifying FIVE case laws in terms of facts and decisions. Your opinion of this doctrine.

Answer 1

First let us understand what the doctrine of frustration of the contract depicts. The doctrine of frustration of contract in the contract act defines the impossibility of a contract by the parties individually or collectively by an event which is not at all in the control of the parties.

Now let us take the examples of 5 case laws which relate to such doctrine.

In the case of Satyabrata Ghose v. Mugneeram Bangur & Co, the main facts and decisions were the performance was not impossible but the performance of the contract became to an end. A contract for sale of land was discharged and came to an end by reason of certain supervening circumstances which affected its performance.

In the case of Taylor v/s Caldwell the performance of the contract becomes physically impossible because of the disappearance of the subject-matter. But the principle is not confined to physical impossibilities. It extends also to cases where the performance of the contract is physically impossible, but the object the parties had in mind has failed to materialize

In the case of Herne Bay Steam Boat Co. v. Hutton which also arose from the postponement of the coronation. The Royal Naval Review was proposed to be held on the occasion. The defendant chartered a steamboat for two to take out a party of paying passengers for the purpose of viewing the naval review and for a day’s cruise around the fleet. But the review was cancelled and the defendant had no use of ship. Yet he was held liable to pay the unpaid balance of the hire less the profit which the plaintiff had made by the use of ship in the ordinary course.

In the case of Tsakiroglou & Co Ltd v Noblee Thorl G m b H. The appellants agreed to sell to the respondents three hundred tons of Sudan groundnuts c.i.f. Hamburg. The usual and normal route at the date of the contract was via Suez Canal. Shipment was to be in November/December 1956, but on November 2, 1956, the canal was closed to traffic and it was not reopened until the following April. It is stated that the appellants could have transported the goods via the Cape of Good Hope.

In the case of Raja Dhruv Dev Chand v Raja Harmohinder Singh where SHAH J at once observed that the courts in India have generally taken the view that Section 56 of the Contract Act is not applicable when the rights and obligations of the parties arise under a transfer of property under a lease.It was one of the cases arising out of the partition of the country into India and Pakistan. The lease in question was that of an agricultural land for one year only. The rent was paid and the lessee was given possession. Before the land could be exploited for any crop, came partition which left the land in Pakistan and the parties migrated to India. The action was to recover the rent paid. But no such recovery was allowed.

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