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The Ways in Which Contracts Can Become Frustrated

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A contract may be discharged by frustration on a few circumstances. According to Section Contract Act 1950, there are provisions of three (3) clauses which may be the circumstances of frustration of contract. Generally, contract can become frustrated when an agreement to do impossible or unlawful act has been made. Referring to the Contract Act 1950, the three clauses provide for frustration of contract are as follow: * S57 (1) CA – An agreement to do an act impossible in itself is void. Illustration – A agrees with B to discover treasure by magic.

The agreement is void. * S57 (2) CA – 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. * Illustration – A and B contract to marry each other. Before the time fixed for the marriage, A goes mad.

The contract becomes void. S57 (3) CA – Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, the promisor must make compensation to the promisee for any loss which the promisee sustains through the non-performance of the promise. * Illustration – A contracts to marry B, being already married to C, and being forbidden by the law to which he is subject to practice polygamy.

A must make compensation to B for the loss caused to her by the non-performance of his promise. From the wording of section 57 (2), it is clear that there are two instances of frustration, i. e. when a contract to do an act becomes impossible or unlawful. However, the frustration should be superevening and subsequent to the formation of the contract. It should be some event which the promisor could not prevent, as a ‘self induced frustration’ does not discharge a party from his contractual obligation – Yee Seng Plantation Sdn. Bhd. v. Kerajaan Negeri Terengganu and Ors.

However, there are also circumstances that the contract might be discharged although there was no breach or default by either party. According to H. A. Berney v. Tronoh Mines Ltd. , the plaintiff sued for breach of contract of service. On the invasion of Malaya by the Japanese forces the European staff of the dependant company was evacuated from Tronoh, Tanjong Tuallang and other places, but the plaintiff elected to remain at Tanjong Tuallang. The defendant Contended that consequent on the Japanese occupation f Perak, the contract of employment between them and the plaintiff was discharged by frustration.

By studying the case of Davis Contractors Ltd. v. Fareham Urban District Council, frustration occurs whenever the law recognizes that, without default of either party, a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract. Non haec in foedera veni – It was not this that I promised to do.

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