NOTES


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

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.



Ans.
Increase in price of urid daal - does not amount to supervening impossibility (Sec. 56). Mr. Varma committed breach of contract. If Mr. Swamy waits till 09.12.2006 - Mr. Varma shall be liable to pay damages to Mr. Swamy. The amount of damages shall be 10 tons @ ₹ 13 per kg (i.e., difference between the contract price and price as on 09.12.2006), i.e., ₹ 1,30,000. However, if some supervening impossibility arises before 09.12.2006 (e.g., imposition of ban on trading in urid daal by the Government), the contract shall become void, and consequently, Mr. Varma shall not be liable to pay any damages. If Mr. Swamy repudiates the contract on 04.12.2006 Mr. Varma shall be liable to pay damages to Mr. Swamy. The amount of damages shall be 10 tons @ ₹ 10 per kg (i.e., difference between the contract price and price as on 04.12.2006), i e., ₹ 1,00,000.

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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


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