The main difference between the Principle of frustration and the ‘Force Majeure’ clause is that the first one is a statutory principle[7] (which was included in the drafting of the Law by the wisdom of the legislator) and the Court has the obligation to examine the contract in question, while the second one is a clause which shall be included in the contract of question.
As it was held by the Supreme Court of Cyprus: “The doctrine of frustration comes into play when a contract becomes impossible of performance, after it is made, on account of circumstances beyond the control of parties or the change in circumstances makes the performance of the contract impossible. In fact, impossibility and frustration are often used as interchangeable expressions. The changed circumstances make the performance of contract impossible. In India, the law dealing with frustration must primarily be looked at as contained in sections 32 and 56 of the Contract Act. The rule in section 56 exhaustively deals with the doctrine of frustration of contracts and it cannot be extended by analogies borrowed from the English Common Law. The Court can give relief on the ground of subsequent impossibility when it finds that the whole purpose or the basis of the contract has frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was not contemplated by the parties at the date of the contract”[8].
The legal effect of applying the principle of frustration is the voidance of the contract in question. In this way the parties to the contract are released from any further obligations they have under that contract[9].
The importance of including ‘Force Majeure” clause in the drafting of the Contract
As it was analyzed above, the Principle of Frustration applies by the Court only in cases where there was not a ‘Force Majeure’ clause in the contract of the question, because of the unforeseeable event[10]. The importance for both Parties that will enter into an Agreement, to include a ‘Force Majeure’ clause is out of question. It cannot only be used as a shield but also as a sword, by either party when the unforeseeable event occurs.
Finally, while drafting a contract we should bear in mind that clause of ‘Force Majeure’ should not be generic and/or vague as the Court may reject the clause.
[1] Article 10 of the Law of Contracts (Cap 149).
[2] Chesire, Fifoot & Furmston’s, “Law of Contract”, Oxford University Press, 17th Edition (2012), p.714.
[3] Ibid.
[4] Denny, Mott and Dickson Ltd v James B Fraser & Co Ltd [1994] AC 265 at 272, 274, [1994] 1 All ER 678 at 681, 683
[5] Pollock and Mulla: “The Indian Contract and Specific Relief Acts”, LexisNexis India 9th Edition page. 397
[6] Channel Island Ferries Ltd v Sealink UK Ltd [1988] 1 Lloyd’s Rep. 323 (10 December 1987)
[7] Article 56 of the Contract Law (CAP. 149)
[8] KIER (CYPRUS) ν. TRENCO CONSTRUCTIONS (1981) 1 CLR 30
[9] Article 56(2) of the Law
[10] Polyvios G. Polyviou: “Contract Law in Cyprus, Theory and Practice”, Chrysafinis and Polyviou (2017), p. 567
