It is not possible to reach agreement on changing circumstances and it has also been decided that, when an examination of the contractual conditions in the light of the circumstances in which it was concluded, it has never been agreed that the parties have never agreed to be bound in a fundamentally different situation that arises unexpectedly, the contract is no longer binding on that date, not because the Tribunal considers that it is fair at its own discretion, but that it is not applicable in that situation, according to an effective design; Shyam Biri Works Pvt. Ltd. v U.P. Forest Corporation, AIR 1990 SC 205. The frustration of a contract renders the contract invalid and fulfills the contractual obligations of the parties. However, section 65 of the Act provides that, where an agreement has become inconclusive, the person who has benefited from such an agreement is “obliged” to restore or compensate it, from which it was obtained. For example, X, a singer, has a contract with Y, a theater manager, to sing two nights a week in her theater, and Y agrees to pay her a hundred rupees for each evening performance. X intentionally misses the theater on the sixth night and Y withdraws the contract. Y has to pay X for the five nights she sang. The question that arises is whether this section also applies to contracts cancelled out of frustration. The frustration of a contract arises without fault or control of one party and, therefore, a party should not be required to compensate in such a case. However, the lack of adequate compensation may also result in a loss for the other party.
It is therefore hoped that the Indian judiciary will shed light on these issues and provide an appropriate means for cases of breach of contract. In Ganga Saran v Firm Ram Gopal, the applicant and the defendant concluded five contracts in which the defendant undertook to deliver 184 bales of victoria Cotton Mills fabric. The contract provided that the seller would continue to send the goods to the buyers as soon as the mills had prepared them; they would continue to supply the buyers as soon as the goods were delivered from the mills to the sellers and the goods were delivered from the goods prepared by the mills. . . .