6.6 Doctrine of Supervening Impossibility (Frustration)

The doctrine: the contract validly formed, the world changed — the performance impossible or radically different from what was bargained: from the civil law's impossibilium nulla obligatio to the common law's frustration (Taylor v. Caldwell — the destroyed music hall; Krell v. Henry — the coronation's cancellation; the Nepali jurisprudence's anchor: Pradip Raj Pandey v. Karmalaxmikanshakar — the Supreme Court's frustration-doctrine application). The grounds' catalogue: (i) destruction of the subject-matter; (ii) supervening illegality (the law's post-contract prohibition — the licence revoked, the embargo imposed); (iii) the non- occurrence of the event-and-state making performance's foundation (the frustration-of-purpose); (iv) death-or-incapacity in the personal contracts; (v) the radical change of circumstances — rebus sic stantibus, codified in the Muluki Civil Code's fundamental-change-of-circumstances provision (the discharge on the essential basis's transformation). The non-frustration limits (the four): the contract's own risk-allocation (the force-majeure clauses displacing the doctrine); the mere hardship-and-expense (the market's collapse, the price's rise — the commercial bad luck); the self-induced impossibility; the foreseeability-and-bargained- risk questions. The consequences: the discharge (prospective under the Code's design); the restitution's unwinding — the payments-and-benefits returned per the Code's restoration rules (the loss-lying- where-it-falls problem; the statutory adjustment's comparative note).