Question

Lalchi Traders agreed to supply cotton yarn to Farzi Textile Limited at a fixed price for one year. Three months after the formation of the contract the price of yarn increased sharply, making it commercially unviable for Lalchi Traders to continue the supply at the agreed price. Therefore, they terminated the contract on the ground of difficulty/impossibility of performance. Under the provisions of the Contract Act, 1872 briefly describe:

(i) whether the contract would be discharged under the above circumstances.

(ii) what would be your decision if Lalchi Traders were importing yarn and Government has imposed a ban on its import.

its business law subject

Answer 1