Introduction – Contracts Involving Impossibility of Performance
The concept of impossibility of performance is one of the most significant doctrines in contract law. It refers to situations where the performance of a contractual obligation becomes impossible or unlawful due to circumstances beyond the control of the parties. Under the Indian Contract Act, 1872, this principle is governed primarily by Sections 56 and 65. The doctrine is based on the legal maxim “lex non cogit ad impossibilia” — the law does not compel a man to do what he cannot possibly perform.
In simpler terms, when an act becomes impossible to perform due to natural, legal, or unforeseen events, the contract becomes void. However, the law makes a clear distinction between initial impossibility (impossible from the beginning) and subsequent impossibility (becomes impossible after the contract is made).
Statutory Framework – Section 56 of the Indian Contract Act, 1872
Section 56 states:
“An agreement to do an act impossible in itself is void.”
“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.”
The section covers three essential aspects:
- Initial Impossibility: When an agreement is impossible from the start, it is void ab initio.
- Subsequent Impossibility or Frustration: When the act becomes impossible after the formation of the contract.
- Restitution (Section 65): If any benefit is received under such a void contract, it must be restored.
1. Initial Impossibility
An agreement to do an impossible act is void from the beginning. This is known as pre-contractual impossibility.
Example:
A agrees to discover treasure by magic. Such an agreement is void as the act is inherently impossible.
Case Law:
- Satyabrata Ghose v. Mugneeram Bangur & Co. (1954 AIR 44, SC)
The Supreme Court held that impossibility under Section 56 does not mean literal impossibility; it includes practical impossibility where the performance becomes impracticable or useless due to changes in circumstances.
2. Subsequent Impossibility or Frustration
When performance becomes impossible after the formation of a valid contract, it is referred to as frustration of contract. The contract becomes void as soon as performance becomes impossible or unlawful.
This doctrine is based on justice and equity, ensuring that no party suffers due to circumstances beyond their control.
Events Leading to Frustration:
- Destruction of subject matter (e.g., goods perish before delivery)
- Change in law or government order making the act unlawful
- Death or incapacity of a party essential to the contract
- Outbreak of war between countries affecting trade
- Natural calamities like floods or earthquakes preventing performance
Leading Cases:
- Taylor v. Caldwell (1863) 3 B & S 826
The defendants agreed to let a music hall for concerts. Before the first concert, the hall was destroyed by fire. The court held that the contract was frustrated because the subject matter had perished.
(Link: Taylor v. Caldwell – Case Summary) - Krell v. Henry (1903) 2 KB 740
The defendant hired a room to watch the coronation procession of King Edward VII. The procession was canceled due to the King’s illness. The court held that the foundation of the contract had failed, so the contract was frustrated. - Satyabrata Ghose v. Mugneeram Bangur & Co. (1954 AIR 44, SC)
The Supreme Court elaborated that the term “impossible” in Section 56 does not mean physical or literal impossibility but includes impracticality due to a change in circumstances that defeats the contract’s purpose. - Naihati Jute Mills Ltd. v. Khyaliram Jagannath (1968 AIR 522, SC)
The court clarified that mere commercial hardship or rise in cost does not amount to impossibility; the performance must become objectively impossible, not merely inconvenient.
3. Doctrine of Frustration – Legal Principles
The doctrine of frustration automatically discharges both parties from further obligations. It prevents unjust enrichment and upholds fairness in contractual dealings.
However, frustration cannot be self-induced. If a party deliberately brings about the impossibility, they cannot claim discharge.
Example: If a contractor stops work due to his own negligence, he cannot plead frustration.
4. Restitution under Section 65
When a contract becomes void due to impossibility, any advantage received must be returned or compensated.
Section 65: “When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it.”
Example:
If a person paid advance money for an event that later became impossible to hold, the advance must be refunded.
5. Limitations of the Doctrine
- It applies only when the impossibility arises after the contract is made.
- It does not apply to self-induced frustration.
- Mere difficulty or increased cost does not make performance impossible.
- The doctrine cannot override express contractual provisions like a force majeure clause, which parties can include to cover unforeseen events.
6. Force Majeure Clauses
Modern contracts often include force majeure clauses that specify the events under which parties are excused from performance.
Typical force majeure events include:
- Natural disasters
- War or terrorism
- Government orders or legal prohibitions
- Epidemics or pandemics
During the COVID-19 pandemic, many contracts invoked the force majeure clause to claim impossibility, especially in commercial leases and service contracts.
Conclusion
The doctrine of impossibility under Section 56 acts as a safeguard against unforeseen events that make performance impossible or unlawful. It reflects the dynamic nature of contract law, balancing legal certainty with equitable relief. However, courts apply it cautiously to prevent misuse by parties seeking to escape contractual obligations. The principle ensures that justice is served in every situation, acknowledging that the law cannot compel what is impossible.
Also Read
Breach of Contract and Remedies under the Indian Contract Act, 1872
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