COUNTINOUS INTERNAL ASSESSMENT II, 2025
3. WHETHER GOVERNMENT OF INDIA’S SUBSEQUENT BAN ON
THE EXPORT OF LINSEED OIL TO FINLAND RENDERED THE
CONTRACT VOID OR IMPOSSIBLE OF PERFORMANCE UNDER
SECTION 56 OF THE INDIAN CONTRACT ACT, 1872?
The respondents humbly submit before the Hon’ble Court, the contract entered between the
petitioner and the respondent has become void in lieu of the impossibility of performance, in
accordance with the doctrine of frustration, due to the Government of India’s ban on the
export of linseed oil to Finland under Section 56 of the Indian Contract Act1, 1872.
It is respectfully submitted that the argument will emphasise-
a) Unforeseen administrative or regulatory restrictions by the state render the contract
void due to impossibility of performance under section 56 of the Indian contract act.
[3.1]
b) The doctrine of frustration applies not only to physical impossibility but also to the
destruction of the contractual object. [3.2]
c) The petitioner is not entitled to compensation or any other form of restitution from the
respondent under section 56 of the Indian contract act. [3.3]
[3.1] UNFORESEEN ADMINISTRATIVE OR REGULATORY RESTRICTIONS BY THE
STATE RENDER THE CONTRACT VOID DUE TO IMPOSSIBILITY OF
PERFORMANCE UNDER SECTION 56 OF THE INDIAN CONTRACT ACT.
i. In a situation wherein, parties enter into a contract, but due to external factors beyond
the control of the parties, the object upon which the contract’s performance depended
ceases to exist; such contract is rendered void due to impossibility of performance of
the same. As explained in the case of Taylor v. Caldwell-
“As subject to an implied condition that the parties shall be excused, in case, before
breach, performance becomes impossible from perishing of the thing without default
of the contractor.”2
Section 56 of the Indian Contract Act, 18723 states a contract wherein the object
becomes impossible to perform or unlawful; after the contract is made and such
circumstance was beyond the control and/or knowledge of the promisee; the contract
becomes void.
ii. It is further submitted that, section 56 4 outlines circumstances under which a contract
becomes void due to impossibility or illegality. As stated in Satyabrata Ghose v.
Mugneeram Ghose & Co5, “Performance becomes impossible from perishing of the
1
Indian Contract Act, 1872, § 56, No. 9, Acts of Parliament, 1872 (India).
2
Taylor v. Caldwell 122 English Reports 309; 3 Best & Smith's Queen's Bench Reports
826.
3
Supra note, 1.
4
Supra note, 1.
5
Satyabrata Ghose v. Mugneeram Ghose & Co (1954) AIR 44 SCR 310
MEMORIAL for RESPONDENT
COUNTINOUS INTERNAL ASSESSMENT II, 2025
thing without default of the contractor.’ This principle has been statutorily recognised
in India under Section 56 of the Indian Contract Act, 1872, which covers: (i)
impossibility inherent at the time of contract formation, (ii) impossibility arising after
the contract has been made due to unforeseen events, and (iii) unlawfulness of the act
promised in the contract due to unforeseen events”.
The judgment explains that, if an act is impossible to perform or unlawful at the time
of entering into the contract or after entering; the contract is void under section 56.
iii. In Indian law, section 56 is exhaustive and importing English law de hors the
provisions is not statutorily permissible6 .
iv. In the present set of facts, the petitioner and the respondent entered into a contract on
March 17, 1951; where the petitioner agreed to sell and the defendant agreed to buy
170 tons of raw linseed oil at 170 tons of raw linseed oil in new 40/45 gallon-drums
@ Rs. 80/8/- per maund. The acceptance of the foreign buyers, A/B Schildt Hollbarg,
Dickersby, was communicated to the Defendant through their broker, Soren Barner,
who forwarded the order from Helsinki on 19th March 1951, which the Defendant
received on 26th March 1951.
v. As per a notice, dated November 14, 1949, by Indian export authorities, a licence for
export of linseed oil would only be granted at the time of shipment on a first come
first basis. However, this notice was forthwith superseded on March 27, 1951,
discontinuing the issuance of export licence for linseed oil with immediate effect with
the result that no linseed oil could at all be exported in future.
vi. It is submitted that the fundamental requirement for performance, i.e, the licence to
export linseed oil was precluded by the notice of the Indian export authorities; dated
March 27 1951. Since, the notice rendered the performance impossible beyond the
control and reasonable knowledge of the parties; the contract stands void.
vii. It is respectfully submitted the contract be declared void.
[3.2] The doctrine of frustration applies not only to physical impossibility but
also to the destruction of the contractual object.
i. Impossibility means impracticability with regards to the object and purpose of the
parties to the contract. For this, some supervening event must have occurred which
impacts the foundation of the contract.
ii. As established in Krell v. Henry7 , the contract is said to be frustrated when the main
purpose of the contract does not exist even though the performance might be
physically possible.
6
Supra note, 5
7
Krell v. Henry 2 K.B. 740 (1903).
MEMORIAL for RESPONDENT
COUNTINOUS INTERNAL ASSESSMENT II, 2025
“Law applies the principle not only to cases where the performance of the contract
becomes impossible by the cessation of existence of the thing which is the subject-
matter of the contract, but also to cases where the event which renders the contract
incapable of performance is the cessation or non-existence of an express condition or
state of things, going to the root of the contract, and essential to its performance.”8
The doctrine of frustration applies beyond physical impossibility and encompasses
change in the ground of the subject matter of the contract.
iii. In the case Satyabrata Ghose v. Mugneeram Bangur & Co.9, it is stated that the term
“impossible” under Section 56 of the Contract Act does not mean literal or physical
impossibility. Performance need not be absolutely impossible; if an event makes it
impracticable and fundamentally alters the basis of the agreement, it amounts to
impossibility in law. Hence, when the very object of the contract is defeated, the
contract is treated as frustrated.
iv. A contract becomes void when the act becomes impossible or unlawful.10
v. In the present set of facts, the ban on the export of linseed oil did not constitute a
physical impossibility, however, it did destroy the object of the contract and made
performance unlawful.
vi. It is submitted before the hon’ble court, the ban on the export of linseed oil destroyed
the core purpose of the contract and invoked the doctrine of frustration. The doctrine
is not only limited to physical impossibility but, also covers circumstances of
destruction of contractual object.11 The contract between parties, is thus frustrated and
automatically void.
vii. It is humbly submitted the contract is frustrated due to destruction of contractual
object and stands void.
[3.3] The petitioner is not entitled to compensation or any other form of
restitution from the respondent under section 56 of the Indian contract act.
8
Supra note, 7.
9
Supra note, 5.
10
Supra note, 1.
11
Supra note, 7.
MEMORIAL for RESPONDENT
COUNTINOUS INTERNAL ASSESSMENT II, 2025
i. In a situation wherein, a person enjoys some benefit after the contract has been
declared void must, either return the said benefit or pay restitution or
compensation to the party as per section 65 of the Indian contract act.12
“When a contract becomes void, any person who has received any advantage
under such agreement or contract is bound to restore it, or to make compensation
for it to the person from whom he received it.”13
ii. The doctrine of frustration is really an aspect or part of the law of discharge of
contract by reason of supervening impossibility or illegality of the act agreed to be
done and hence comes within the purview of section 56. ... If an unforeseen event
strikes at the root of the contract and alters its nature, the contract is considered
frustrated. The contract is thus discharged and both parties are released from
further obligation.14
iii. In the present set of facts, the performance of export became impossible due to the
ban on export of linseed oil and such circumstance was unforeseeable and beyond
the control of the parties.
iv. It is humbly submitted that the petitioner is not entitled to any compensation in the
view of the fact that the contract became void. Since, it was not due to the fault of
any party, the petitioner is not entitled to any compensation.
12
Indian Contract Act, 1872, § 65, No. 9, Acts of Parliament, 1872 (India).
13
Supra note, 12.
14
Supra note, 5.
MEMORIAL for RESPONDENT
