What is Section 56 of the Indian Contract Act?
—A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Compensation for loss through non-performance of act known to be impossible or unlawful.
What is doctrine of frustration?
The doctrine of frustration basically talks about the impossibility of performance of the contract. It means a contract cannot be executed because of an incident beyond the control of parties. The performance of such a contract becomes frustrated i.e. it becomes complicated, impossible or even illegal.
What is Section 32 of Contract Act?
Section 32 of the 1872 Act reads as under: “Enforcement of Contracts contingent on an event happening – Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.”
What is force majeure in India?
A force majeure clause may include acts of Government, war, acts of God or any other events or circumstances as may incorporated by the parties in the contract prior to its execution. Frustration of contract is a statutory remedy. Section 56 of the Indian Contract Act enshrines the doctrine of frustration of contract.
What is Section 5 of Indian Contract Act?
5. A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.
What happens if a contract is frustrated?
If a contract is frustrated, it is automatically discharged at the time of frustration. This means that the parties to the contract do not need to perform any future contractual obligations. In addition, parties to the contract cannot claim damages for non-performance of these future obligations.
What are the grounds of frustration of contract?
Courts declare frustration of a contract on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they …
What is the difference between force majeure and frustration?
First, frustration can be invoked by any party to a contract without being referred to in the contract, while force majeure must be included in a contract to be invoked. Second, a party generally has to meet a higher threshold to rely on frustration than on force majeure.