Principle: Under Section 56 of the Indian Contract Act, a contract becomes void if performance becomes impossible or unlawful due to an unexpected event beyond the control of both parties (Doctrine of Frustration).
Facts: A hotel agrees to lease its open-air banquet lawn to Varun for a wedding on November 15. On November 10, an unprecedented flash flood washes away the lawn and the municipal authority bans access. Is the hotel liable for breach of contract?

Answer and explanation

Correct answer: B. No, the contract was discharged by supervening impossibility of performance

  1. Step 1: Under Section 56 of the Indian Contract Act 1872, a contract becomes void when the performance of the agreed act becomes impossible or unlawful due to an unexpected supervening event beyond the control of either party.
  2. Step 2: The destruction of the open-air lawn by an unexpected flash flood and the subsequent municipal ban destroyed the very subject matter of the contract without fault on the part of the hotel.
  3. Step 3: The contract was automatically discharged by the doctrine of frustration, freeing the hotel from liability for breach.
Answer
No, the contract was discharged by supervening impossibility of performance.

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