Page 73 - DMGT102_MERCANTILE_LAWS_I

Unit 5: Discharge of Contract

Circumstances of supervening impossibility. A contract is deemed to have become impossible of Notes
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.

Examples:
(i) A, a singer, agrees with B, to give performance at some particular theatre on a specifi ed
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.

Example: X borrowed ` 10,000 from Y to be repaid by a certain date. X dies before the
debt becomes due for repayment. X’s legal representative shall be liable to pay the amount. Of
course, the legal representative’s liability is limited to the extent of the value of the assets inherited
by him.
3. Subsequent illegality. Where by subsequent legislation, the performance of a contract is
forbidden by law, the parties are absolved from liability to perform it. A contracts to supply
B 100 bottles of whisky. Before the contract is executed, i.e., bottles supplied, dealings in all
sorts of liquor are declared forbidden, the contract becomes void.

4. Declaration of war. If war is declared between two countries subsequent to the making
of the contract, the parties would be exonerated from its performance. A contracts to take
indigo for B to 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.
5. Non-existence or non-occurrence of a particular state of things. When certain things
necessary for performance cease to exist, the contract becomes void. A contracted to have

a flat for viewing the coronation procession of the king. The procession had to be cancelled
on account of king’s illness. In a suit for recovery of the rent it was held that the contract
became impossible of performance, and that the hirer need not pay the rent (Krell v Henry
(1903) 2 K.B. 740).
Circumstances in which a contract is not discharged on the ground of subsequent impossibility.

Except for the five cases mentioned above, subsequent impossibility does not discharge
contracts. He who agrees to do an act must do it, unless absolutely impossible under the fi ve
cases mentioned above. There are at least five cases, where the performance is not excused on

account of subsequent impossibility. These are:

1. Difficulty of performance. The mere fact that performance is more difficult or expensive or

less profitable than the parties anticipated, does not discharge the contract. A promised to
send certain goods from Mumbai to Antiwerp in September. In August, war broke out and
shipping was not available except at very high rates. Held, the increase of freight rates did
not excuse performance.

LOVELY PROFESSIONAL UNIVERSITY 67