BRF 2011 (Solved)

Supervening Impossibility (Section 56)
Impossibility in a contract may either be inherent in the transaction or it may be introduced later by the change of certain circumstances material to the contract.
Examples of Inherent Impossibility
(1) A promises to pay B Rs. 50,000 if B rides on horse to the moon. The agreement is void.
(2) A agrees with B to discover treasure by magic. The agreement is void.
The impossibility in these cases is inherent in the transaction. Such a contract is void ab-initio. On the other hand, 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.  A contract is deemed to have become impossible of performance and thus void under the following circumstances:
1.       Accidental destruction of the subject matter of the contract.
2.       Non existence or non occurrence of a particular state of things
3.       Incapacity to perform a contract of personal services
4.       Change in law
5.       Outbreak of war: 
a)      by emergency legislation controlling prices or otherwise relaxing restrictions of trade
b)      by prohibiting or restraining transaction with alien enemy.
Effects of Supervening Impossibility
1.       A contract to do an act which, after the contract is made becomes impossible, or by reason of some event which the promisor couldn’t prevent, unlawful, becomes void when the act becomes impossible or unlawful. (Section 56, para 2).
2.       According to para 3 of Section 56, where a person has promised to do something which he knew, or with reasonable diligence, might have known, and which the promisee did not know to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the promise.
3.       When a contract becomes void, any person who has received any advantage under such contract is bound to restore it, or to make compensation for it to the person from whom he received it (Section 65).
a)      A contract to sing for B at a concert for Rs. 1,000, which is paid in advance. A is too ill to sing. A must refund to B 1,000 rupees.
b)      A pays B 1,000 rupees in consideration of B’s promising to marry C, A’s daughter. C dies before marriage. B must repay A the 1,000 rupees.