Frustration Of Contracts Essay

4948 words - 20 pages

INTRODUCTION
Frustration of contract is employed when performance of the obligations by any of the parties becomes impossible due to external factors without any fault of any of the parties. It must be remembered that it applies to those cases of subsequent impossibility and not to those which are impossible right from the outset.
The doctrine of frustration was devised for a different class of cases of contracts in which the circumstances so occur that the execution of the contract as required by the terms of the contract are impeded. The changes resulting from such supervening circumstances are not opportune but are sudden and uncalled for which make the contractual obligation ...view middle of the document...

The common law left it to the parties to negotiate, bargain and make their own provisions to maintain the contract against any substantial change in the circumstances out of the control of the parties and held the defaulting party responsible to pay the compensation to the aggrieved party though the defaulting party had no fault and the circumstantial changes and happening were out of his control. This created great hardship for the defaulting party who forced by the situation and the course of events had to give up the performance of the obligation. Thus to overcome the onerous of common law’s insistence on literal performance of promise and the need for justices was arisen as a result of which the doctrine of frustration was proposed.
This doctrine was evolved to mitigate the rigor of the common law’s insistence on literal performance of absolute promises [2]. In 1647 , in the case paradine vs jane[3] the rule as to absolute contract was laid down, where paradine sued jane for rent due upon a lease. Jane pleade that an alien enemy had invaded wuth army and entered upon the defendant’s possession and expelled him out of possession due to which he could not take the profits from the lease. The plea was that the rent was not due because the lessee had been deprived of the profits from which the rent should have come by the events which are beyond his control. The court held that this was no excuse[4].
The judges laid down rule as to absolute contracts in the following words:[5]
…when the party by his own contract creates duty or charge upon himself , he is bound to make it good if he may, notwithstanding any accident by inevitable necessity, because he might have against it by his contract .
This rule of absolute rule works well where it was reasonable to expect it to provide for the event having regard to the nature of the contract or the circumstances in which it was made.[6]
The rule as to absolute contract implies that when the law casts a duty upon a man if he binds himself by contract absolutely to do a thing then he cannot escape liability for damages for proof that as events turned out performance is even impossible. The justification to the rule as to absolute contract is that a party to a contract can always guard against unforeseen circumstances by express stipulation, but if he voluntarily undertakes an absolute and unconditional obligation then he cannot complain because events turn out to his disadvantage.[7]
It is because of the fact that the parties to the agreement could have expressly provided that upon the fulfillment of some condition or occurrence , both of them would be discharged of some or complete duties or obligations under the contract.
The rule as to absolute contracts has been accepted and applied in a number of cases. A modification of this rule came in Atkinson v Ritchie[8] which was a case of supervening illegality, where the dispute was among the cargo-owner and the ship-owner of the British ship for...

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