Frustration of a contract occurs in two conditions. Firstly, where the contract has become physically impossible and secondly, where the object has failed. The above was laid down in the case of:

Correct option is C

The landmark case that laid the foundation for the doctrine of frustration in contract law is Taylor v. Caldwell (1863). In this case, the parties had entered into a contract for the use of a music hall for concerts. Before the concerts could be held, the music hall burned down without fault of either party, rendering performance of the contract physically impossible.

The court held that the contract was discharged due to impossibility of performance, and the parties were excused from their obligations. This case established the principle that a contract can be frustrated when:

Performance becomes physically impossible, or
The underlying object of the contract has failed due to unforeseen circumstances.

Information Booster:
In India, the doctrine of frustration is recognized under Section 56 of the Indian Contract Act, 1872.
Section 56 declares that a contract to do an act which becomes impossible or unlawful after the contract is made becomes void.

Additional Information:
* Krell v. Henry deals with frustration of purpose (King’s coronation cancellation).
* Paradine v. Jane is a pre-frustration case where the court enforced strict liability, even in the face of hardship.
* Taylor v. Caldwell marked a shift in judicial approach, introducing fairness and equity in cases of impossibility.