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Frustration of Contracts

Frustration of Contracts

“ Frustration of Contracts ”

A contract refers to an agreement enforceable by law. A contract creates an obligation on both the parties to perform their respective duties. However, in case of non-performance of contract on part of any one party makes him liable to pay damages to the aggrieved party. “Frustration of Contract” is an exception to such provision.

What do you mean by Frustration of Contracts ?

Ans. Frustration of Contracts occurs when an unforeseen event makes the performance of contract impossible. Frustration of contract can be co-related with “Doctrine of impossibility”. There can be several factors that are beyond the control of the parties to a contract which makes the performance of contractual obligations impossible. Certain Examples are: – Floods, Fire, Wars, Civil Disturbances. International transactions involve parties from two different countries. There can be many possibilities of occurrence of unseen circumstances. Listing each of them is a very difficult task. Therefore, it is advisable to specify in the contract about such clause.

Effects of this Clause

As mentioned earlier, Frustration of contract acts as an defense against liability to pay any damages. In case if a party does not performs his duties due to such reasons then the contract can be terminated and the party will not be liable to pay damage to other party. However, one thing should be kept in mind that frustration is not acceptable as an excuse where the circumstances is foreseeable, and is not applicable to certain types of contracts like insurance policies.

Other Similar Concepts

In the common law countries (principally the UK and the Commonwealth Countries), such situations are referred to as “ Frustration of Contracts ” but in the civil law countries (principally western Europe) it is also known as “Force Majeure”. “Relief” is been termed for the same concept in Russia and Eastern Europe.

Frustration of Contracts

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