Delhi Judicial Services Pre Exam 2007

A contract is not frustrated

Verified Answer
A. By impossibility of govt. restriction or orders
B. By destruction of subject matter of the contract
C. By commercial impossibility
D. All of the above

Explanation:

The doctrine of frustration (Section 56, Indian Contract Act) applies when the performance of a contract becomes impossible or unlawful due to an unforeseen event. While impossibility due to government restrictions or destruction of the subject matter can frustrate a contract, mere commercial impossibility (i.e., the performance becomes more difficult or expensive than anticipated, but not literally impossible) does not generally lead to frustration. Parties are expected to bear normal commercial risks.