Doctrine of Frustration: Competitive Exam Questions with Concepts Explained!

28 Dec 2023  Read 1979 Views

Hey, learners! Guess what? We've got a super interesting article for you this time. We're diving specifically into the Contract Act, checking out something called the 'Doctrine of Frustration'. But here's the fun part – we're not going into the super complicated sections of the Indian Contract Act. Instead, we're going to tackle it by answering questions from the CLAT PG 2024.

So, when you read this blog, you won't just figure out what the Doctrine of Frustration is. You'll also see the kind of smarts the CLAT Consortium wants from CLAT PG peeps. By checking out questions, you won't just get the law stuff but also see how it plays out in real situations.

Given below are some images comprising questions directly from the CLAT PG 2024 test. Give it a look and try your hand at answering the questions!

Competitive Exam Questions on Doctrine of Frustration

Note: Below are the hints given for only those questions in the above-mentioned images that were tough to solve!

What is the Frustration of Contract?

Now, to answer the above- mentioned questions, you must have a good understanding of the Doctrine of Frustration, as well as related concepts such as:

  • Concept of Frustration of Contract

  • Position of Doctrine in India

  • Force Majeure Vs. Doctrine of Frustration

Concept of Frustration of Contract

The "Doctrine of Frustration" is a legal principle that comes into play in contract law when unforeseen and uncontrollable events occur, making it impossible to fulfill the terms of a contract. When these events, known as "frustrating events," occur, the contract may be deemed void, and parties are relieved from their contractual obligations. 

The key aspect is that the frustrating event must be beyond the control of the parties and should fundamentally alter the nature of the contract, making performance impossible, illegal, or radically different from what was initially agreed upon. The doctrine aims to provide fairness and prevent injustice in situations where performance becomes impractical due to unforeseen circumstances.

Indian law, primarily influenced by common law, incorporates the concept of absolute liability, but the doctrine of frustration serves as an exception to absolute liability. The Indian Contract Act of 1872 addresses contracts without explicitly defining 'frustration of contract.' Section 56 of the Act deems agreements impossible or incapable of performance as void, reflecting the doctrine of frustration.

Section 56 is rooted in the legal principle expressed by the maxim "les non cogit ad impossibilia," signifying that the law does not force an individual to undertake actions that are genuinely impossible for them to accomplish. (Hint: Ques. 70)

Position of Doctrine of Frustration in India

Common Law Influence:

  • Indian law draws inspiration from common law, inheriting the concept of absolute liability in contracts.

  • The doctrine of frustration serves as an exception to the principle of absolute liability.

Indian Contract Act of 1872:

  • The Indian Contract Act governs contracts and related matters in India.

  • While the term 'frustration of contract' is not explicitly defined, Section 56 of the Act deems agreements impossible or incapable of being performed as void, indicating the recognition of the doctrine of frustration.

Landmark Cases on Doctrine of Frustration

1. Satyabrata Ghose v. Mugneeram Bangur and Co. (1954)

Background:

The case addressed the status of the doctrine of frustration in India and its legal standing.

Outcome:

The Supreme Court held that the doctrine of frustration is a positive rule of law in India, unlike in England where it was recognized by courts without being mentioned in any statute.

The doctrine in India is applicable when the contract becomes impossible to perform due to reasons or factors beyond the control of the parties, emphasizing its application in cases of subsequent impossibility. (Hint: Ques. 67)

2. Punj Sons Pvt. Ltd. v. Union of India (1986)

Background:

The case involved a contract for the supply of milk containers with tin coating, and the frustration of the contract due to the unavailability of tin ingots.

Outcome:

The court ruled that the contract was frustrated because the necessary tin ingots were unavailable, demonstrating the application of the doctrine in cases where external factors make performance impossible.

This case underscores the impracticality of restricting the scope of Section 56 and excluding cases of construction, emphasizing the broader applicability of the doctrine in diverse contractual situations.

3. Energy Watchdog v. Central Electricity Regulatory Commission (2017)

Facts of the Case:

In this case, Gujarat Urja Vikas Nigam Limited (GUVNL) and Haryana Utilities issued a public notice inviting proposals for power supply. Both entities selected Adani Enterprises, entering into an agreement. Adani Enterprises filed a petition in the Central Electricity Regulatory Commission, citing a surge in coal prices from Indonesia and seeking relief from contractual obligations under the doctrine of frustration.

Issues Involved:

The primary issue was whether the doctrine of frustration applied to the situation.

Judgment of the Court:

The court ruled that the increased coal prices did not render the contract impossible to perform. The doctrine of frustration was deemed inapplicable as alternative methods existed to fulfill the contractual obligations despite the price hike in Indonesian coal.

This judgment established that a mere rise in external factors, such as coal prices, does not necessarily warrant the application of the doctrine of frustration, especially if alternative means are available to fulfill contractual obligations.

(Hint: Ques. 69)

Difference between Doctrine of Frustration and Force Majeure

Basis

Force Majeure 

 

Doctrine of Frustration


 

Definition:

An unforeseeable event making contract performance impossible.

Example: A natural disaster, such as an earthquake, preventing the delivery of goods.

Contract becomes impossible or radically different due to unforeseen events beyond the parties' control.

Example: A government regulation prohibiting large gatherings, leading to the cancellation of an event.

Inclusion in Contracts:

Inclusion: Contracts often include a force majeure clause.

Example: A construction contract may specify natural disasters as force majeure events.

Inclusion: Applied when there's no force majeure clause.

Example: A contract lacking a force majeure clause may invoke the doctrine if performance becomes impossible.

Nature of Events:

Events: Specific events listed in the force majeure clause.

Example: Pandemics, wars, and natural disasters as explicitly stated in the contract.

Events: Broader range of unforeseen events.

Example: Sudden unavailability of essential materials or changes in law affecting contract performance.

Consequences and Remedies:

Consequences: Often specified in the force majeure clause.

Example: Contract may provide for extension of time or termination without penalties.

Consequences: Governed by common law principles.

Example: The principle of restitution may apply, requiring the return of benefits received under the frustrated contract.

Invocation Criteria:

Criteria: Specific conditions must be met as outlined in the force majeure clause.

Example: Events must be beyond the party's control and efforts must be made to mitigate loss.

Criteria: Contract becomes impossible or radically different due to unforeseen events.

Example: Strikes, unforeseen regulatory changes, or a sudden shortage of crucial resources.

 

Answers to above Questions

These questions are extracted from SET D of CLAT PG 2024

Q66 - C

Q67 - B

Q68 - A

Q69 - A

Q70 - D

About the Author: Anubha Mishra | 17 Post(s)

She has completed her BA.LLB. from Raipur and is currently pursuing LL.M from TISS Mumbai. She also has a practicing experience of 2 years at District Court, Raipur, as a Junior Advocate.

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