NOTES


CA-Foundation > Business Laws > The Indian Contract Act, 1872 - Discharge of Contract (Old & New)

“Impossibility of performance, is, as a rule, not an excuse from performance.” Explain.



Ans.

SUBSEQUENT OR SUPERVENING IMPOSSIBILITY

Pre-contractual Impossibility

A contract which at the time was entered into was impossible to perform, is void ab-initio and creates no rights and obligations. Sec. 56(1) states that "An agreement to do an act impossible in itself is void."Such fact of impossibility may be-

1. Known to the parties: In such a case the agreement is void ab-initio and creates no rights and obligations. For example a promise to ride a horse to the Sun or A agrees with B to discover treasure by magic. The agreement is void.

2. Unknown to the parties: When both the parties are ignorant of the impossibility at the time of making the contract, the contract, is void on the ground of mutual mistake. For example: A agrees to sell his horse to B but unknown to both the parties the horse had already died at the time of making the contract. The contract is void.

3. Known only to the promisor: On the contrary, if the promisor alone knew about the impossibility of performance at the time of making the contract, he shall have to compensate the promisee for any loss which such promisee sustains through the non-performance of the promise. [Sec. 56(3)]


PreviousNext


Notes of The Indian Contract Act, 1872 - Discharge of Contract (Old & New)



  1. Define anticipatory breach of contract. Also state its effect on the contracts.
    see in detail

  2. What are pre-determined damages? State the difference between liquidated damages and penalty.
    see in detail

  3. “Impossibility of performance, is, as a rule, not an excuse from performance.” Explain.
    see in detail

  4. Mr. Swamy of Kerla placed an order with Mr. Varma of Jaipur for supply of urid dual on 10.11.2006 at a contracted price of ₹ 40 per kg. The order was for the supply of 10 tonnes within a months' time viz., before 09.12.2006. On 04.12.2006 Mr. Varma wrote a letter to Mr. Swamy stating that the price of urid daal was sky rocketing to ₹ 50 Per. Kg. and he would not be able to supply as per original contract. The price of urid daal rose to ₹ 53 on 09.12.06 Advise Mr. Swamy citing the legal position.
    see in detail

  5. Aakash contracted with Bakul to supply him (Bakul) 500 tons of iron-steel @ ₹ 5,000 per ton, to be delivered at a specified time. Thereafter, Aakash contracts with Chirag for the purchase of 500 tons of iron-steel @ ₹ 4,800 per ton, and at the same time told 'Chirag that he did so far the purpose of performing his contract entered into with Bakul. Chirag failed to perform his contract in due course, consequently, Aakash could not procure any iron-steel and Bakul rescinded the contract. What would be the amount of damages which Aakash could claim from Chirag in the circumstances? Explain with reference to the provisions of the Indian Contract, 1872.
    see in detail


CA-Foundation - Business Laws:

CA-Foundation: