An agreement to do act impossible in itself is void." Explain doctrine of frustration and specific grounds.

The statement "An agreement to do an act impossible in itself is void" refers to initial impossibility,,. This principle is enshrined in the first paragraph of Section 56 of the Indian Contract Act, 1872,,,. It means that if the performance of an agreement is inherently impossible from the very beginning, the agreement is considered void ab initio,,, meaning it never had any legal effect as a contract. For example, an agreement to discover treasure by magic is void because it is impossible in itself,.

The Doctrine of Frustration deals with a different scenario: subsequent or supervening impossibility or illegality,,,,,,. This doctrine applies to contracts that were valid when they were made, but whose performance later becomes impossible or unlawful due to an event that the promisor could not prevent,,,. When such an event occurs, the contract becomes void at the time the act becomes impossible or unlawful,, effectively discharging the parties from their contractual obligations,,.

In India, the doctrine of frustration is covered by Section 56, paragraph 2 of the Contract Act, 1872,,,,. The Supreme Court of India, in the landmark case of Satyabrata Ghose v Mugneeram Bangur,,,,,,, clarified that Section 56 lays down a positive rule of law in India regarding supervening impossibility or illegality,,. This means that the principles for deciding cases of frustration in India are found within the statute itself,, rather than strictly applying the theories developed under English common law, such as the "doctrine of implied term" or the "theory of qualifying power of the court"-,-,-.

The term "impossible" used in Section 56 is not limited to literal or physical impossibility,,. As held in Satyabrata Ghose, it is used in a practical sense to include cases where performance, though not literally impossible, has become practically useless from the perspective of the object and purpose the parties had in view,,. Frustration occurs when an intervening event or change of circumstances is so fundamental that it strikes at the root of the contract and is entirely beyond what the parties contemplated when they entered into the contract,,.

Specific Grounds of Frustration (as established by case law):

The principle of frustration is applicable to a variety of contracts,. Some well-established grounds include:

1. Destruction of the Subject-Matter: Where the specific item necessary for performing the contract is destroyed after the contract is made, without the fault of either party,,.

   • Case Example: Taylor v Caldwell,,,,,,,. A contract to rent a music hall was frustrated when the hall was destroyed by fire before the performance dates,,.

2. Non-occurrence of a Contemplated Event (Failure of Object): Where the expected happening of a specific event was the fundamental basis or foundation of the contract, and that event fails to occur,,,,.

   • Case Example: Krell v Henry,,,,. A contract to rent a flat specifically to view a coronation procession was frustrated when the procession was cancelled,. The court found the viewing of the procession was the foundation of the contract.

   • Contrast Example: Herne Bay Steamboat Co v Hutton. Hiring a boat to view a naval review and for a day's cruise was not frustrated when the review was cancelled, as the cruise was still possible, showing the review was not the sole basis of the contract.

3. Death or Incapacity of a Party: In contracts requiring personal skill or performance, the death or incapacitating illness of a party can frustrate the contract .

   • Case Example: Robinson v. Davison. A piano player's illness prevented her from performing at a concert, frustrating the contract.

   • Case Example: Simmons Ltd v Hay. Permanent incapacity of an employee due to illness frustrated the employment contract. Section 56 Illustration (b) also shows a marriage contract becoming void if one party goes mad,.

4. Government or Legislative Intervention: When performance becomes impossible or illegal due to new laws or actions by government authorities,,. The interference must be substantial enough to transform the contemplated conditions of performance,.

   • Case Example: Metropolitan Water Board v Dick Kerr and Co. Government orders during WWI stopped construction work, frustrating the contract.

   • Also applies if a vendor is prevented from executing a sale deed because they cease to be the owner by operation of law.

5. Intervention of War: War or war-like conditions can frustrate contracts by making performance impossible, excessively difficult, or illegal (e.g., trading with the enemy), , ,,.

   • Case Example: Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd. War made it illegal to supply machinery to a country occupied by the enemy, frustrating the contract.

Cases Not Covered by Frustration:

The doctrine does not apply in certain situations, :

• Commercial Hardship or Difficulty: Mere increase in expense, difficulty, or reduction in profit does not amount to frustration,,,,.

  • Case Examples: Tsakiroglou and Co Ltd v Noblee Thorl GmbH (longer route due to Suez Canal closure). Sachindra Nath v Gopal Chandra (restaurant rent increase due to troop presence). Ganga Saran v Ram Charan Ram Gopal (failure of expected supplier, but goods available elsewhere).

• Self-Induced Frustration: A party cannot plead frustration if the event was caused by their own act, default, or election,,,,.

  • Case Example: Maritime National Fish Ltd v Ocean Trawlers Ltd,,,. A party who failed to nominate a specific trawler for a limited license could not claim frustration when the trawler couldn't be used,.

• Completed Transfers (Leases): While an agreement to lease may be frustrated, a completed lease (which creates an interest in land) is generally not discharged by frustration under Indian law.

Effect of Frustration:

When frustration occurs, the contract is dissolved automatically by operation of law,,,,. This does not depend on the parties' intention, opinion, knowledge, or election,,, unlike rescission or novation,,. The court determines if frustration has occurred.

Parties are discharged from their future obligations. Section 65 of the Indian Contract Act deals with the obligation of persons who have received advantage under a contract that becomes void (including due to frustration),. It provides that a party who has received any advantage under such an agreement is bound to restore it or make compensation for it,. For instance, if an advance payment was made for performance that becomes impossible due to frustration, the party who received the payment may be required to refund it. This aligns with the principle seen in cases like Fibrosa in English law, allowing recovery of advance payments based on total failure of consideration. Some Australian states have specific legislation to allow for adjustment between parties in frustrated contracts,,.

In summary, the doctrine of frustration under Section 56 of the Indian Contract Act provides a mechanism to discharge contracts when supervening events make performance impossible or unlawful in a practical sense, fundamentally altering the contract's basis, provided the event is not self-induced.