Discharge by impossibility of performance
- Initial impossibility or pre-contractual impossibility: Sec 56(1) Initial impossibility or pre-contractual impossibility exists at the time of making a contract. The initial impossibility may be:
- Known impossibility: It means one or both the parties have knowledge that a promise to perform is impossible even though they enter into an agreement.
Arjun agrees with Rampal to bring a dead man to life. It is known to the parties at the time of making the agreement that the performance is impossible. The agreement is void-ab-initio.
- Unknown impossibility: It means both the parties genuinely believe that the performance of a promise is possible, but in reality it is impossible to perform. It can also be said that, there is a bilateral mistake of parties.
Ravi agrees to sell certain goods to Varma, which were supposed to be on their way from Goa to Chennai in a certain ship. Unknown to both the parties, the ship had already sunk in the deep sea, and the goods ceased to exist at the time of contract. The contract becomes void when the impossibility of performance is discovered.
- Supervening impossibility: Sec 56(2) an impossibility which arises subsequent to the formation of the contract shall make the contract void. Such an impossibility is called supervening impossibility. It is also termed as the doctrine of frustration. A contract becomes void on account of the subsequent impossibility only if the following conditions are satisfied:
- The act should have become impossible after the formation of the contract
- The impossibility should have been caused by a reason of some event which was beyond the control of the promisor
- The impossibility must not be the result of some act or negligence of the promisor himself
Examples of supervening impossibility/ Doctrine of Frustration
- Destruction of subject matter: Sometimes the very contract of the subject matter gets destroyed. The contract is discharged if the subject matter of the contract is destroyed after the formation of the contract without any fault of either party.
Note: If the destruction of the subject matter is due to the fault of any party, he is liable for the damage caused to the other party.
Amar agreed to sell his crop of wheat. The entire crop was destroyed by fire though there was no fault of the party. The contract was discharged.
A music hall was let out for some musical performance on a certain date. But before the date fixed for the musical performance e, the music hall was destroyed by fire. The music hall was an essential to the subject matter of the contract, the destruction of the music hall brings an end to the contract and the owner is not liable.
- Death or personal incapacity: The contract is discharged on the death or incapacity or illness of a person if the performance of a contract depends on his personal skill or ability.
- Declaration of war: The pending contracts at the time of declaration of a war are either suspended or declared as void. Generally, the contract at the time of declaration of a war is void, when the contract is against public interest or national interest.
Sonu contracts to take in cargo for Monu at a foreign port. Sonuâ€™s Government later on declares war against the country in which the port is situated. The contract becomes void when the war is declared.
Note: If the war has broken out in some parts of the world not involving the two countries of contracting parties, it will not affect the contract even if the performance as become difficult because of disruption of traffic routes.
- Change of Law: Sometimes when the contract is entered into is completely fine and enforceable but due to subsequent change in law the contract is rendered impossible. The contract is discharged if the performance of the contract becomes impossible or unlawful due to change in the Law after the formation of the contract.
A contract between two persons for sale of forest trees was held to have become void when the government banned cutting of trees in the forest.
- Failure of ultimate purpose: A contract may have been made with one particular purpose known to both the parties. An event frustrates the purpose even before the contract is performed. The contract shall become void.
Ram and Sita contract to marry each other. Before the time fixed for the marriage, Ram goes mad. The contract becomes void.