HOW TO GET OUT OFF CONTRACTUAL OBLIGATIONS

 PRATHA BAKSHI

INTERN AT Lexis And Company

Email- rashisinghbakshi@gmail.com

Contact number – 8253040077

TASK 10

HOW TO GET OUT OFF CONTRACTUAL OBLIGATIONS: LEGAL

SOLUTIONS AND WAYOUTS

FACTS-

 M/S India Chemicals is a supplier of xyz chemical to Suncare Pharma,

which is used to make certain medicines

 M/S India Chemicals had an agreement for timely supply of the said

chemicals.

 The said agreement has a clause if your client fails to supply the chemicals

in time, Suncare will suffer huge loss and as such on this account Rs.50

lakhs.

 During the National Lockdown in March 2020, labourers working at M/S

India Chemicals left the factory and further, the raw material chain was

disrupted and as such M/S India Chemicals failed to supply chemicals to

Suncare Pharma.

 There was huge demand for medicines during that period.

 Suncare Pharma could also not produce and there by suffered huge loss in

crores.

 Now Suncare Pharma has demanded Rs.10 lakhs from M/S India Chemicals

in terms of the agreement

ISSUES-

Under the given facts and circumstances, is it possible to get out the contractual

obligations for M/S India Chemicals?

ANSWER-

Yes, M/S India Chemicals can get out of this contractual obligations because the

corona pandemic and the lockdown was not foreseen so, M/S India Chemicals was

not ready to bear the risk so M/S India Chemicals can use section 56 of Indian

Contract Act- 56. Agreement to do impossible act. — An agreement to do an act

impossible in itself is void. — an agreement to do an act impossible in itself is void."

Contract to do act afterwards becoming impossible or unlawful.—A contract to do

an act which, after the contract is made, becomes impossible, or, by reason of some

event which the promisor could not prevent, unlawful, becomes void when the act

becomes impossible or unlawful.1 —A contract to do an act which, after the

contract is made, becomes impossible, or, by reason of some event which the

promisor could not prevent, unlawful, becomes void when the act becomes

impossible or unlawful.2" Compensation for loss through non-performance of act

known to be impossible or unlawful.—Where one 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. —where one 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."