The Indian Contract Act, 1872, is a significant legislation that governs the entire gamut of contractual relationships in India. It lays down the framework for the creation, enforcement, and breach of legal agreements between individuals and entities. One of the essential provisions of the Act relates to the validity of agreements that are dependent on an impossible event.
Section 36 of the Indian Contract Act specifies that an agreement that is contingent upon the occurrence of an event that is impossible to perform is void. In other words, if an agreement is based on a contingency that cannot be fulfilled due to its inherent impossibility, such an agreement does not have any legal validity or force.
The section further explains that if the parties involved in the agreement were aware of the impossibility of the event at the time of entering the contract, such an agreement is also considered void. This provision ensures that the contracting parties act with due diligence and do not enter into agreements that have no possibility of being fulfilled.
Furthermore, if the contingency on which the agreement hinges becomes impossible to perform after the contract`s creation, the agreement becomes void at that point. In such a scenario, neither party can enforce the agreement`s terms and conditions since the basis of the agreement itself has become impossible.
It is crucial to note that the impossibility of the event should be intrinsic and not merely due to the failure of one of the contracting parties. Suppose the event is impossible to perform due to the failure of one party to fulfill their obligations. In that case, the agreement remains valid, and the non-defaulting party can seek legal remedies for the other party`s breach of the contract.
In conclusion, the Indian Contract Act, through Section 36, provides a critical safeguard against the creation of agreements that are subject to impossible contingencies. This provision also ensures that the contracting parties act with due diligence and exercise caution while entering into legal agreements. As a result, it upholds the principles of fairness, transparency, and equity in contractual relationships.