Assignment: Business &

Corporate Law

Impossibility and
Frustration of the
Contract
Submitted to:
Mam Qurat-ul-ain
Farooqui
Submitted by:
Hafiz muhammad omer
Roll No.

BE-13-56

Impossibility and
Frustration of the
Contract
Impossibility may exist at the time of the contract or may arise
subsequently. It may be physical or legal impossibility. In either case, the
agreement is void ab-initio. The object being that the law cannot compel
the impossible. When the subject matter is destroyed, the contract is
frustrated by virtue of physical impossibility. Even where the object
contemplated by the parties fails to materialize the contract is frustrated.
A contract may be discharged by frustration. A contract may
be frustrated where there exists a change in circumstances, after the
contract was made, which is not the fault of either of the parties, which
renders the contract either impossible to perform or deprives the contract
of its commercial purpose. Where a contract is found to be frustrated,
each party is discharged from future obligations under the contract and
neither party may sue for breach. The allocation of loss is decided by
the Law Reform (Frustrated Contracts) Act 1943.
In addition to impossibility, some similar contract defenses
include impracticability and frustration. Impracticability occurs where it
has become impracticable or unreasonable for one or both parties to
proceed with their contract duties. This is sometimes more difficult to
prove than impossibility, since the duties might still be performed, but
are difficult to do so in some way.
Frustration occurs where the overall purpose of the contract has been
frustrated or negated. Again, the duties need not be impossible to
perform, but its usually necessary to prove that both parties would not
benefit by proceeding with their duties.

Where a flat was hired for purposes of witnessing coronation ceremony

on fixed announced days and subsequently the coronation ceremony was
cancelled, it was held that as the object of the contract was frustrated by
the non-happening of the coronation, the defendant was not liable to pay
balance of rent.
A contract to do an act which after the contract is made becomes
impossible or unlawful by some event which the promisor could not
prevent, becomes void when the act becomes impossible or unlawful.
When the impossibility of performance cannot reasonably be supposed
to have been in contemplation of the contracting parties when the
contract was made, performance or further performance of the promise
is excused.
The contract may be impossible of performance due to supervening
impossibility or illegality or due to frustration of a contract by
occurrence of an unexpected event or a change of circumstances beyond
the contemplation of parties or over which the parties have no control. A
contract may be frustrated by emergency, regulations and restrictions.
Impossibility may also be created by change of law or destruction of
subject matter. Where an act becomes unlawful, the performance of the
contract can be excused on the ground of impossibility. However, if
impossibility is brought about by an act of a party to the contract, the
performance of the contract is not excused. The impossibility of
performance must be in respect of a term of the contract. However, if
contract can be performed in any other manner, the contract is not
frustrated. There is a general principle that a party prevented from doing
an act by some circumstances beyond his control, can do so at the first
subsequent opportunity.