Thursday, October 11, 2007

Contract Act_Practical Problems_41

Anil was due to perform a contract on 20th Feb. 1989, but on 16th Feb., repudiated his obligation. On 23rd Feb., the contract became illegal through a change in law. Varun, the other party to the contract, filed a suit for breach of contract on 20th Feb. Decide the case with reasons.

Varun in this case will be held entitled to the remedies for breach of a contract. The case is not covered under Section 56 whereunder supervening illegality renders a contract void thereby relieving the promisor of his obligations. Section 56 covers those cases where supervening impossibility/illegality takes place before the time for performance is due. Since in the given case, performance was due on 20th Feb. 1989, the repudiation on 16th amounts to breach of contract and thereby entitles the aggrieved party, viz., Varun, to claim compensation (damages). He, however, will not be entitled to claim 'specific performance'—the transaction having become illegal.

Thus, the contract becoming illegal on 23rd Feb., will not affect Varun's right to claim damages.

No comments: