Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Searching Case Laws & Precedent on Legal Query..!
Scanned Judgements…!
Failure of the object of a contract - When the main purpose or object of a contract fails, the legal consequences depend on whether there is a total or partial failure. A total failure of consideration allows the innocent party to rescind the contract and claim restitution of payments made, as the foundation of the agreement has collapsed ["ALARIS v. WIJEYSEKERE"], ["SUNGEI WANG INVESTMENT LTD vs LIM HUI SENG - High Court"], ["LIM SWEE CHOO & ANOR vs ONG KOH HOU @ WON KOK FONG & ANOTHER APPEAL - Court Of Appeal"].
Rescission and restitution - In cases of total failure, the innocent party may choose to rescind the contract and recover monies paid, effectively treating the contract as void ["ALARIS v. WIJEYSEKERE"], ["SUNGEI WANG INVESTMENT LTD vs LIM HUI SENG - High Court"]. This is based on the principle that if performance becomes impossible or the foundation of the contract is destroyed, the contract can be terminated.
Partial failure and damages - If there is only a partial failure of consideration, the law generally restricts the injured party to claiming damages for breach rather than rescinding the entire contract. The performance must have some value for the contract to be considered not totally frustrated ["TRIP4ASLA SDN BHD & ANOR vs DOWINDON TRAVEL SDN BHD & ORS - High Court"], ["MATTHES APPUHAMY v. RAYMOND et al."].
Fundamental breach and frustration - A breach that goes to the root of the contract or circumstances rendering performance impossible may justify termination. When the object of the contract is frustrated or becomes impossible to perform, the parties are discharged from further obligations ["TRIP4ASLA SDN BHD & ANOR vs DOWINDON TRAVEL SDN BHD & ORS - High Court"], ["1. Pallocci Donatella vs Yamuna Kanthi Stein - Supreme Court"].
Conditional and divisible contracts - If the contract is divisible or conditional on certain events (e.g., obtaining approvals), failure of these conditions may lead to termination or damages, depending on whether the failure is material or total ["CARUPPEN CHETTY v. HABIBHOY"], ["REGALIA ENTITY SDN BHD vs LEMBAGA AMANAH YAYASAN SARAWAK & ANOR - High Court Malaya Kuala Lumpur"].
Legal principle - The key principle is that a total failure of consideration grants the right to rescind, while partial failure typically results in damages for breach. The object of the contract must be fundamentally frustrated for rescission due to failure of its main purpose ["LIM SWEE CHOO & ANOR vs ONG KOH HOU @ WON KOK FONG & ANOTHER APPEAL - Court Of Appeal"], ["SUNGEI WANG INVESTMENT LTD vs LIM HUI SENG - High Court"].
Analysis and Conclusion:The consequence of failure of the object of a contract hinges on whether the failure is total or partial. Total failure of consideration permits rescission and restitution, effectively rendering the contract void. Partial failure restricts the injured party to damages for breach, provided performance still retains some value. The nature of the failure—whether it frustrates the contract's main purpose—determines whether the parties can lawfully terminate their obligations ["ALARIS v. WIJEYSEKERE"], ["LIM SWEE CHOO & ANOR vs ONG KOH HOU @ WON KOK FONG & ANOTHER APPEAL - Court Of Appeal"].
In the world of business and agreements, contracts form the backbone of transactions. But what happens when the very object or purpose of a contract fails? This could arise from a breach, impossibility, or unforeseen events rendering performance futile. Commonly asked: what is the consequence of failure of object of a contract? Typically, it triggers remedies like damages, discharge of obligations, or contract rescission, but outcomes depend on specifics like jurisdiction and terms. This post breaks down the principles, primarily under Indian law, with insights from key cases. Note: This is general information, not legal advice—consult a lawyer for your situation.
The 'object' of a contract refers to its purpose or subject matter. Failure occurs when that purpose cannot be achieved due to non-performance, breach, or external events. Under the Indian Contract Act, 1872, this isn't just a minor hiccup; it can lead to serious repercussions.
Breach of contract generally results in the contract becoming voidable or discharged, with parties liable to restore benefits or pay damages. As per legal findings, breach results in the contract becoming voidable or discharged, and parties being liable to restore benefits received or pay damages as per the terms of the contract and relevant statutes STATE OF KERALA VS UNITED SHIPPERS & DREDGERS - 1982 0 Supreme(Ker) 136Satishchandra Ratanlal Shah VS State of Gujarat - 2019 3 Supreme 204.
The cornerstone remedy is compensation for actual loss. Section 73 of the Indian Contract Act states that when a contract is breached, the injured party can recover damages that naturally arise in the usual course of things or which the parties knew... to be likely to result from the breach Shapoor Fredoom Mazda VS Durga Prosad Chamaria - 1961 0 Supreme(SC) 83Maa Vaishno Enterprises VS State of Madhya Pradesh - 2020 0 Supreme(MP) 378.
In a Malaysian vessel construction dispute, the court awarded damages for wasted expenditure due to the defendant's failure to deliver, noting the failure to deliver a constructed vessel constitutes breach of contract, validating the claim for damages based on wasted expenditure LA LEISURE PTY LTD vs SABRECRAFT MARINE SDN BHD & ORS. Similarly, non-delivery of goods in an Indian yarn contract led to damages only for specific undelivered bales, as partial failure didn't frustrate the whole object Swami & Co vs Nukala Venkatasuhbiah - 2025 Supreme(Online)(Mad) 74671.
Failure can discharge the contract entirely:
If unforeseen events make performance impossible, Section 56 discharges both parties. The doctrine of frustration... discharges both parties from further performance when unforeseen events fundamentally alter the basis of the contract Maa Vaishno Enterprises VS State Of Madhya Pradesh - 2020 0 Supreme(MP) 593MOHAMMAD SHER KHAN VS RAJA SETH SWAMI DAYAL - 1921 0 Supreme(SC) 94.
But limitations apply:- Absolute Obligations: Parties can't escape if they foresaw risks or contract terms override Maa Vaishno Enterprises VS State Of Madhya Pradesh - 2020 0 Supreme(MP) 593.- Statutory Contracts: In a Kerala Abkari case, forfeiture clauses prevailed over frustration, as statutory provisions like Rule 5(15)... provide for automatic forfeiture upon non-compliance Maa Vaishno Enterprises VS State Of Madhya Pradesh - 2020 0 Supreme(MP) 593.
A property sale during the pandemic saw the court grant extension post-impossibility, holding the promisor is entitled to seek reciprocal performances... after the period of impossibility expires Amal Peterson VS Authorized Officer, Tamilnadu Mercantile Bank Ltd. , Tirunelveli - 2020 Supreme(Mad) 700.
Courts emphasize context:
These illustrate that while damages are standard, total failure enables stronger remedies like rescission.
Not every failure yields full remedies:- Mental Agony: Rarely compensated unless natural consequence Ghaziabad Development Authority VS Union Of India - 2000 4 Supreme 373.- Criminal Liability: Breach alone doesn't trigger crimes like cheating without fraud S. R. Tools and Engineering Works VS Southern Roadways Ltd. and another - Consumer (1991)KSS-KSSIIPL Consortium VS Gail India Ltd. - 2019 0 Supreme(Del) 1859.- Explicit Clauses: Contracts specifying consequences (e.g., no frustration for certain events) bind parties Maa Vaishno Enterprises VS State Of Madhya Pradesh - 2020 0 Supreme(MP) 593.- Time Not Essence: Delay may not discharge unless notice makes it so PERERA v. ABEYSEKERA.
To mitigate risks:- Draft Clear Terms: Include breach consequences, force majeure, and liquidated damages.- Document Losses: Prove actual, direct harm for claims.- Invoke Arbitration: For disputes, as in lease cases Tropical Breweries (P) Ltd. , Rep. by its Director Sharad Kumar, Chennai VS State of Tamil Nadu, Rep. by its Principal Secretary to Government, Chennai - 2019 Supreme(Mad) 533.- Assess Frustration: Check if events truly alter the contract's foundation before claiming discharge.
Courts prioritize contractual stability, balancing fairness without unjust enrichment Maa Vaishno Enterprises VS State of Madhya Pradesh - 2020 0 Supreme(MP) 378.
Failure of a contract's object disrupts expectations, but law provides structured remedies. Stay informed, draft wisely, and seek professional advice to navigate these complexities effectively.
References (based on provided documents):1. Maa Vaishno Enterprises VS State Of Madhya Pradesh - 2020 0 Supreme(MP) 593 - Frustration and statutory clauses.2. Shapoor Fredoom Mazda VS Durga Prosad Chamaria - 1961 0 Supreme(SC) 83 - Section 73 damages.3. STATE OF KERALA VS UNITED SHIPPERS & DREDGERS - 1982 0 Supreme(Ker) 136 - Damages principles.4. And others as cited.
#ContractLaw,#BreachOfContract,#FrustrationDoctrine
In consequence of the failure of the plaintiff to make payment for the chests which had already been delivered the defendant was entitled in law to be discharged from any obligation to supply the remainder of the chests. ... B. 581 failure to pay for the first instalment was held not to show an intention to repudiate the whole contract. ... In consequence of this lapse the broker's so-called bought and sold notes were signed, not by the broker, But by the purchaser. The subsequent history of this ....
The object is to put the plaintiff in the position as if the contract had been performed (Mogregor on Contract (13th Ed) p 21). [191] The learned JC had assessed damages on the basis of loss of profit. ... Compensation for failure to discharge obligation resembling those created by contract (3) When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive....
It is the consequence of a common law right to rescind a contract which in effect, entitles the innocent party to restitution of the monies paid in reliance of the promise of performance by the defaulting party. ... Analysis And Findings Delays In Construction What Is The Legal Consequence Of The Pleaded Delay Events In The Construction Of The Vessel? ... If the reasonable and commercially sensible man sees the performance of the contract of having some value, it should be taken that there has been no total fa....
The relevant part of the agreement of October 31, 1945, is a contract of bailment, and the cause of action is the failure of the bailee, in breach of his obligations under the contract, to deliver the goods entrusted to him by the bailors. ... On the failure of the defendant to return the jewellery, the plaintiffs sued him for the recovery of their property or, in the alternative, for compensation for their loss. The action was based on a simple breach of contract. ... Colombo, 17,762/M #HL_STAR....
Now, non-payment on the one hand or non-delivery on the other, may amount to such an act, or may be evidence for a Jury of an intention wholly to abandon the contract and set the other party free… Where by the non-delivery of part of the thing contracted for, the whole object of the contract is frustrated ... Clause 7 is again relied on:— “The sellers are not responsible for late or non arrival of the goods, etc.” in consequence of circumstances over which the sellers shall have no control. ... But looking at all the cir....
The contract is divisible; an action could be brought for each month's failure to deliver the sarees and dhooties. ... In this action the appellant, who is the proprietor of the Ceylon Spinning and Weaving Mills, was sued by the respondents for the recovery of a sum of Rs. 8,700 damages alleged to have been sustained by them in consequence of the failure on the part of the appellant to supply them with ... This action was for the failure to deliver sarees and dhooties during the eight months J....
Rightly, no standard text on the law of contract dealing with a chapter on breach has any discussion on 'total failure of consideration'. ... QUESTION 6: Whether on its true principle the doctrine of a total failure of consideration has no application where there has been only a partial failure of performance or the claimant has derived some benefit from the contract so that he is restricted to an action in damages for breach of contract ... At common law the right to "rescind" a #HL_....
J., and Withers, J., that in consequence of such sale and conveyance first defendant had put it out of his power to specifically perform his agreement to sell the land to plaintiff, and plaintiff could not therefore claim specific performance of such agreement. ... under the contract was to exact payment of Rs. 500 as liquidated damages in addition to any special damage which he might be entitled to from circumstances unforeseen at the date of the contract. ... For my own part I feel some difficulty in understanding on what principl....
A. said that " where a time for the performance of a vital term in a contract has been stipulated for and one party is in mora by reason of his failure to perform it within that time, but time is not of the essence of the contract, the other party can make it so by giving notice that if the obligation ... It was urged that there can be no failure of consideration in such a case where the contract itself is void. It is in just such a case, I think, that the money paid for that particular purpose ca....
As a consequence of the dismissal of the claim against Aster Bina, the claim against the second and 3rd defendants ought to have been similarly dismissed. ... [53] One must not lose sight of the overriding principle that the object of modern pleadings is to prevent surprise and to enable disputes to be litigated in an orderly fashion: Raja Abdul Malek Muzaffar Shah Raja Shahruzzaman v. ... In reality therefore, the plaintiff's action was merely a claim for a debt that became due under the SPA, due to Aster Bina's failure to pay the consi....
Therefore, when the non-performance does not go to the root of the contract, a promisee can only seek for damages but not the discharge provided he is ready and willing to perform his part. The word 'failure' mentioned under Section 54 of the Act qua a contract involving reciprocal promises is akin to a refusal to perform and that too in its entirety, as discussed, on the scope of Section 39 of the Act. The failure may be with respect to a particular act of a contract but it should go to its roots rendering the performance of the rest of the contract is the one not sustainable.#HL_....
The claim petition was, therefore, not maintainable. Thus, there is breach of contract meaning thereby failure on the part of the respondent in the performance of contract. Further, by not challenging the test result as per Clause 9(c), the respondent waived its rights to invoke the arbitration clause by filing the claim before the Tribunal. The respondents failed to supply the balance quantity of 276 MTs of CLS by the date fixed as per the specification.
The petitioner had also been put in possession of the plot. This was a contract inpersonam between the writ petitioner and the third respondent. The relationship between the parties had moved away from that of seeking administrative sanctions to that of an agreement bound by contract. A failure to fulfil any of the terms of the contract would invite the consequences as stipulated in the contract.
There was no concluded contract between the parties within the requirements of Art. 299 of the Constitution by the acceptance of the application of the petitioners for the allotment of land measuring 400 sq. yards for construction of a residential house on Badarpur, Mehrauli Road, New Delhi according to the scheme. He further submits that this is recognized even in the Division Bench, which repeatedly observed that the challenge in the writ is confined to the applicability of the doctrine of promissory estoppel, and that the Petitioners have based their case solely on the doctrine of promiss....
Act for payment is mandatory and the words “must be” clearly expressed the legislative intent. It was also made clear that in the case of a bill of exchange it must be presented for payment to the “acceptor”. In this case, admittedly the bill was not presented to M/s Lgee Enterprise, the named acceptor in the bill and as a consequence “other parties thereto” were totally absolved of their liability. The consequence of failure to present was also made clear that the failure will absolve the liability of any of the “other parties thereto”.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
