Page 67 - DCOM103_COMMERCIAL_LAW

Commercial Law

Notes Waiver: It means relinquishment or abandonment of a right. Where a party waives his rights
under the contract, the other party is released of his obligations. A promises to paint a picture for
B. B afterwards forbids him to do so. A is no longer bound to perform the promise.
Merger: A contract is said to have been discharged by way of merger where an inferior right
possessed by a person coincides with a superior right of the same person. A, who is holding a
certain property under a lease, buys it. His rights as a lessee vanish; they are merged into the
rights of ownership which he has now acquired. The rights associated with lease were inferior to
the rights associated with the ownership.

6.2.3 Discharge of Contracts by Impossibility of Performance

A contract may be discharged because of impossibility of performance. There are two
types of impossibility: (i) Impossibility may be inherent in the transaction (i.e., the contract),
(ii) Impossibility may emerge later by the change of certain circumstances material to the
contract.

Examples of Inherent Impossibility:

1. A promises to pay B ` 50,000 if B rides on a horse to the moon. The contract is void ab
initio.
2. A agrees with B to discover treasure by magic. The agreement is void ab initio, as there is
an impossibility inherent therein.
“Subsequent or supervening impossibility” as a mode discharge of contract (s.56). Where a
contract originates as one capable of performance but later due to change of circumstances its
performance becomes impossible, it is known to have become void by subsequent or supervening
impossibility. The subsequent impossibility is known as ‘Doctrine of Frustration’ under the
English law.
Circumstances of supervening impossibility. A contract is deemed to have become impossible of
performance and thus void under the following circumstances:
1. Destruction of the subject matter of the contract. Where the subject matter of a contract
is destroyed for no fault of the promisor, the contract becomes void by impossibility of
performance. Thus, where a music hall was agreed to be let out on certain dates, but before
those dates it was destroyed by fire the owner was absolved from liability to let the building

as promised (Taylor v. Caldwell (1863) 122 E R 299).
2. By the death or disablement of the parties. Where the performance of the contract must
be executed personally by the promisor, his death or physical disability to perform shall
render the contract void and thus exonerate him from the obligation.

Example: (i) A, a singer, agrees with B, to give performance at some particular
theatre on a specified date. While on her way to theatre, A meets with an accident and is

rendered unconscious. The agreement becomes void.
(ii) 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.

However, in a case where the contract is not to be executed personally by the promisor,
then death or physical disability does not render the contract void.

60 LOVELY PROFESSIONAL UNIVERSITY