By AADYA CHAUDHARY
COURSE: BA.LLB (Hons.)
SEMESTER: VII
COLLEGE NAME: VIVEKANANDA INSTITUTE OF PROFESSIONAL STUDIES, GGSIPU
DOCTRINE OF IMPOSSIBILITY
Before
diving directly into the concept of doctrine of impossibility, let’s first look
into the definition of a contract as this doctrine has its roots in the Law of
Contracts 1872[1]
which states that a valid contract is an agreement to be fulfilled by the
parties to the contract and it is also imperative that such a contract must be
capable of being performed. Herein, we can make out from the definition itself
that for the completion of the contract there is prior and subsequent condition
attached to it which decides the performance of the contract to be complete or
not.
Let’s
assume A and B. A is the seller of the goods and B is the buyer. Until B makes
the payment to A for the goods, A will not dispatch the goods. The fact that to
get the goods B needs to make the payment and delivery of the goods is
dependent upon that prior condition is what is makes a valid contract.
But
what if the condition attached to the contract becomes impossible to perform in
future so as to make the contract complete and valid?
This
issue is discussed in Section 56 of the
Indian Contract Act, 1872 enunciates the doctrine of impossibility in it and
states that: “an
agreement to do an act impossible in itself is void”.
This
is the basic introduction of this doctrine, where sometimes the performance of
a contract is or becomes impossible due to its own nature or due to some
circumstances which are beyond the control of the parties (ultra vires) which
renders the performance of contract impossible and the purpose of the contract
ceases to subsist.Doctrine of impossibility, in a
nutshell refers to frustration
of contracts on the ground that the party to the contract is unable to
discharge his part of the obligation due to impossibility of performance of
such a contract.
This amounts to discharging parties
of their obligation.
This
frustration is due to the unforeseen situations where it becomes impossible for
a party to a contract to perform the obligations under it.In addition to this it also
talks about a situation in which an act becomes impossible/unlawful or illegal,after the making of the contact. A contract is said to have been ‘frustrated’
if the performance of such a contract becomes impossible/unlawful to be
performed.
For instance look at these illustrations:
a. “A
agrees with B to discover treasure by magic” is void.
b. “A contracts to act at a theatre for six
months in consideration of a sum paid in advance by B. On several occasions A
is too ill to act. The contract to act on those occasions becomes void.”
In both the examples it’s impossible for the
party to the contract to perform the contract.
SALIENT FEATURE OF
DOCTRINE OF IMPOSSIBLITY
·
There must be a valid contract & in
existence between the two parties;
·
There must be a part of the contract
which is still remaining to be
performed;
·
That part of the contract, which is
still to be performed, should become impossible/unlawful/illegal;
·
That the impossibility should be by
reasons of some event which was unseen by the promisor.
TYPES OF IMPOSSIBILITY
The
section includes about two types of Impossibilities
·
Initial Impossibility
·
Subsequent Impossibility.
Initial
impossibility implies that the impossibility should be in existenceat the
time of the formation of the contract which might be known or unknown to
the party.
If
it is known to the party then the agreement is void ab initio. For example, “discovering
treasure through magic.”
In case of Subsequent Impossibility, the performance of the
contract is possible at the time of when agreement was made, but
subsequently due unforeseen and uncontrollable change in the circumstances,
have subsequently become impossible/unlawful or illegal to perform.
For example, A agreed to sell his house to B.
Later on the house was acquired by government. The contract becomes void on the
ground of impossibility and A is discharged of his obligation to perform the
duty to deliver his house to B
Note: Performance cannot be excused on these ground
(no supervening impossibility)
It must be noted that doctrine of
impossibility will not apply to cases where the excuse for non-performance is
merely based on the fact that the act
was inconvenient or
·
The reason of commercial
impossibility, i.e. expectation of higher profit is
not achieved or is profitless,
·
Wherethe necessary raw material is available
at very high price and hence the fact that it’sexpensiveand hence party is
unable to fulfil the contract.
Even
if performance is impossible, a party
may not be able to use the doctrine of impossibility as a defense to
non-performance if the party where he:
- knew of the facts, at the time the
contract was being executed, that
made performance of contract impossible;
- assumption of the risk of impossibility; or
- could have acted in such a way as
to prevent the event of performance of the impossible
CAUSES OF SUSEQUENT
FRUSTRATION
·
Destruction
of subject-matter of contract:
Where the subject matter of a contract is destroyed after the contract is made without
any fault of the parties, the contract is discharged and no party is liable.[2]
·
Death
or personal incapacity of the party:
If the
performance of the contract was dependent upon any personal skill,
qualification or personal ability of the promisee then such contract is
frustrated on the events of death, incapacity or illness of the party who
promised the fulfilment of that condition. The party to contract is discharged
from performing his duty thereafter. A contract which is made for personal service cannot be
performed by any agent or a legal representative.
·
Non-occurrence
of contemplated event:
If the event which was expected to happen and that event is the foundation of
the contract, is cancelled then that contract becomes void on the ground of
frustration.[3]
·
Government,
Administrative or Legislative intervention:
Sometimes, a contract is lawful at the time of its making but it may become
unlawful due to a subsequent change in law or governmental policy. The
obligation is discharged by
impossibility of performance.
·
Intervention
of War:
If a war is declared after the formation of a contract; all pending contracts
with the residents of enemy country is either suspended or declared as void. If
war is of a short duration, it may be revived after the end of the war.
However, if the war continues for a long period, contract will be discharged on
the ground of impossibility
EFFECTS OF SUPERVENING FRUSTRATION
·
Contract becomes void.
·
Restoration or refund of benefit
received.
· Innocent promisee entitled to compensation.
FORCE MAJEURE
The
term force majeure means an unavoidable accident or a chance occurrence. This
clause is included in a contract to avoid uncertainties when any supervening
event occurs and parties cannot be blamed. However, even if, this clause
provides certainty to the contract it is not guaranteed that it will cover all
supervening events. Due to COVID-19 pandemic accompanied by social distancing,
quarantines, mass closings of business, etc., have hampered many pre-pandemic
contractual obligations difficult or impossible to perform. In such a situation
force majeure clause may excuse certain type of contractual performance and
might mitigate some economic losses.
However, if force majeure clause fails to provide the desired relief then in
such a situation, businesses may be forced to rely on the barely used legal
doctrine of impossibility as defense against difficult pre-crisis contractual
obligations. This may be applied where contract signed ceases to exist due to
unforeseeable supervening event without the fault of either party.
INDIAN CASE LAWS
Satyabrata Ghose v Mugneeram Bangur
and Company &Anr. AIR 1954 SC 44
Facts:
The
defendant company launched a scheme to develop the land into a housing colony.
The plaintiff was granted a plot on payment of advance money. The company
committed to constructing the roads thereby making it suitable for residential
purposes. The purchaser was to pay the remaining amount to complete the
conveyance. Meanwhile, a large area of the land was taken over by the State
during the Second World War for war purposes. The company attempted to revoke
the contract on the ground of subsequent impossibility.
Held: The court dismissed the defendant’s suit. The requisition orders
were temporary in nature and no deadline was mentioned in contract for
construction. However, it was obvious for some restrictions to be in effect
during the war, thereby causing delay in the project. Therefore, this delay doesn’t
affect foundation of the contract.
Sushila Devi vs. Hari Singh, AIR
1971 SC 1756
This
case is of This was a case of lease of property, which after the unfortunate
partition, the property in dispute, situated in Gujranwala, and went onto the
side of Pakistan, therefore making the terms of the agreement impossible.
In
this case it was observed that the impossibility viewed by section 56 of the
Contract Act is not limited to something which is not humanely possible. This
was a case of lease of property, which after the unfortunate partition, the
property in dispute, situated in Gujranwala, and went onto the side of
Pakistan, therefore making the terms of the agreement impossible.
ENGLISH CASE LAWS
The origin of Doctrine of
Impossibility is closely related to the English Rule: Subsequent Impossibility
of performance cannot be a valid defense in cases of breach of an obligation
under the contract. This rule was laid down in Paradine vs. Jane 82 Eng.Rep.
897(1647). So, before we dwell into the rationale of a judgment
let’s have a look on the facts of the case: Paradine (Plaintiff) sued Jane
(Defendant) under a lease for three years for unpaid rent. Defendant pleaded
that due to invasion by the German Prince; he was forced out of possession and
therefore he was unable to take the benefits. So, he refused to pay Plaintiff
rent for the duration he was forced out.
However, the court gave judgment in favour of the Plaintiff and the defense was
not held valid; as obligation under the contract was absolute with no exceptions.
The judge held that liability under the contract should be followed under all
circumstances.
This Doctrine of Impossibility was evolved as a reflection of the
aforementioned case. There were cases where the contract couldn’t be performed
due to circumstances through no fault of the defendant, and the rigidity of the
English rule was found to be unreasonable, unfair, therefore an exception to
the rule was need of the time.
CRITICAL ANALYSIS& CONCLUSION
An
agreement which is enforceable in the court of law is known as contract.
Contract also regulates the transfer of risk which is inherent in any
contractual relationship. However, doctrine of impossibility comes into the picture
where one party fails to perform his part of the obligation because of any
subsequent event which was unforeseeable or if one of the party had prior
knowledge that contract entered into is void ab initio which renders it
impossible.It is a well settled law that
the contract becomes impossible to perform only when the foundation or the
genesis for which the contract was made becomes impossible to perform and not
otherwise.
If the contract is frustrated because of the reason of subsequent events such
as destruction of subject matter, death
or incapacity, change in legislation or intervention of war then, it will
work as solid defense.
For a striking difference and to understand
the grounds more clearly we can see that the court excused the defendant to
perform his part of the obligation in the case of Krell vs. Henry and upheld that doctrine of impossibility was applicable
very much whereas if we see the Indian case of Satyabrata vs. Mugneeram there the court dismissed the excuse
of the defendant’s suit and it was held
that delay in construction doesn’t
affect the foundation of the contract and hence not impossible to perform and
therefore doctrine of impossibility was not applicable in the latter case.
The basic functionary of law is to impart justice and as the society changes
due to new emerging needs and wants, law has taken the shape of being dynamic
to serve and resolve the issue to anyone and everyone.
This
doctrine came into being to resolve the issue
At
the end, Indian judiciary has to put forward through trial and error, the test of foreseeability before giving
the final verdict to impart effective justice to the plaintiff.
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