Supervening Impossibility or illegality

 Supervening Impossibility or illegality

By: Robin Pandey                                                                                            Date: 11/03/2022

Sometimes a contract is quite possible to perform when it is made, but some event subsequently, i.e., after making of the contract, happens which renders its performance impossible or unlawful. In such a case the contract becomes void. The second paragraph of Section 56 lays down that: "A contract to do an act which, after the contract is made, becomes impossible, or by Person of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful". For example, "A contracts to act at a theatre for six months, in consideration of a sum of money paid in advance by B. On several occasions A is too ill to act. The contract to act on those occasions becomes void" [illustration (e) to Section 56]. 

Section 65 of the Contract Act deals with the obligations of persons who have received advantage under a void agreement or contract that becomes void. It says: "When an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it." Illustration (d): A contracts to sing for B at a concert for Rs. 1,000 which are paid in advance. A is too ill to sing. A is not bound to make compensation to B for the loss of profits which B would have made if A had been able to sing, but must refund to B Rs. 1,000 paid in advance.

Specific grounds of supervening impossibility 

The following grounds of supervening impossibility or frustration have become well established: 

1. Destruction of the subject matter: If the specific subject matter of the contract is destroyed without the fault of the contracting party the contract becomes void due to supervening impossibility. In Taylor v. Caldwell (1863) A music hall in which one of the contracting parties had agreed to give concerts on certain specified day was accidentally burnt by fire, it was held that such a contract must be regarded "as subject to an implied condition that the parties shall be excused, in case, before breach, performance becomes impossible from perishing of the thing without default of the contract."

 In V.L. Narasu v. P.S.V. Iyer, 1953 a contract to exhibit a film in a cinema hall was held to have become impossible of performance when on account of heavy rains the rear wall of the hall collapsed killing three persons and its licence was cancelled until the building was reconstructed to the satisfaction of the chief engineer.

2. Change of circumstances: The word "impossible" has not been used here in Section 56 in the sense of physical or literal impossibility. The performance of an act may not be literally impossible but it may be impracticable and useless from the point of view of the object and purpose which the parties had in view and if an untoward event or change of circumstances totally upsets the very foundation upon which the parties rested the bargain. Thus a contract will frustrate "where circumstances arise which make the performance of the contract impossible in the manner and at the time contemplated." It can very well be said that the promisor found it impossible to do the act which he promised to do" (Satyabrata Ghosh . Mugneeram, 1954). Illustration (b) appended to Section 56 Says that" A and B contracts to marry each other. Before the time fixed for the marriage, A goes mad. The contract becomes void."

4. Death or personal incapacity of the promisor: Where the performance is to be rendered personally and the person dies or is disabled, the contract stands discharged. Illustration (e) appended to Section 56 says that if "A contracts to act at a theatre for six months in consideration of a sum paid in advance by B. On several occasions A is too ill to act. The contract to act on those occasions becomes void." In Robinson v. Davison (1817), there was a contract between the plaintiff and the defendant that the defendant should play the piano at a concert to be given by the plaintiff on a specified day. On the day in question she was unable to perform due to illness. In an action against the defendant for breach of contract, it was held that the defendant's illness and consequent incapacity excused her.

5. Government or legislative intervention: Where the performance 1S rendered by intervention of law invalid, the contract stands discharged. In Man Singh v. Khazan Singh, 1961 a contract between certain parties for sale of the trees of a forest was discharged when the State of Rajasthan forbade the cutting of tract trees in the area. In Boothalinga Agencies v. Poriaswami, 1969, the contract for the sale of imported 'chicory' held to have become void when sale of such imported goods was banned.

6. Intervention of war: The performance of the contract may become impossible or unlawful by the event of the outbreak of war. A Contracts to take in cargo for B at a foreign port. A's Government afterwards declares war against the country in which the port is situated. The contract becomes void when war is declared. [illustration (d) to Section 56]. In Twentsche Overseas Ltd. v. Uganda Sugar Ltd., 1945, it was held by the Privy Council that if only one of the many possible ways of performing the contract has become illegal or impossible (due to war) the contract is not frustrated.