Question:
Apply the given legal principles to the facts provided in the following of the question and select the most appropriate answer.
Principle : Both parties to a contract are discharged from their respective outstanding obligations in situations where a supervening event significantly changes the nature of contractual rights and/or obligations from what the parties could have reasonably contemplated at the time of executing the contract.
The supervening event must not be a result of default by either party, nor should the contract make a provision for it.
Facts : In the city of Vortoria which is highly susceptible to public health crises, S (a supplier of raw food products) entered into a contract with H (a restaurant owner) for 2 years, whereby S would supply certain raw products to H at pre-determined prices. Their agreement also provided that – “In case of interruption of operations of H on account of epidemics, pandemics or any other public health crisis, the contract will be suspended until the crisis is declared to be over by the government and thereafter pending contractual obligations shall resume.”
Three months were left on the contract when there was a highly contagious virus outbreak in the city, which caused restaurant owners (including H) to suspend operations. Once the outbreak was declared to be over six months later, H refused to purchase raw materials from S arguing that he was discharged from obligations under the contract.
Apply the given legal principles to the facts provided in the following of the question and select the most appropriate answer.
Principle : Both parties to a contract are discharged from their respective outstanding obligations in situations where a supervening event significantly changes the nature of contractual rights and/or obligations from what the parties could have reasonably contemplated at the time of executing the contract.
The supervening event must not be a result of default by either party, nor should the contract make a provision for it.
Facts : In the city of Vortoria which is highly susceptible to public health crises, S (a supplier of raw food products) entered into a contract with H (a restaurant owner) for 2 years, whereby S would supply certain raw products to H at pre-determined prices. Their agreement also provided that – “In case of interruption of operations of H on account of epidemics, pandemics or any other public health crisis, the contract will be suspended until the crisis is declared to be over by the government and thereafter pending contractual obligations shall resume.”
Three months were left on the contract when there was a highly contagious virus outbreak in the city, which caused restaurant owners (including H) to suspend operations. Once the outbreak was declared to be over six months later, H refused to purchase raw materials from S arguing that he was discharged from obligations under the contract.
Principle : Both parties to a contract are discharged from their respective outstanding obligations in situations where a supervening event significantly changes the nature of contractual rights and/or obligations from what the parties could have reasonably contemplated at the time of executing the contract.
The supervening event must not be a result of default by either party, nor should the contract make a provision for it.
Facts : In the city of Vortoria which is highly susceptible to public health crises, S (a supplier of raw food products) entered into a contract with H (a restaurant owner) for 2 years, whereby S would supply certain raw products to H at pre-determined prices. Their agreement also provided that – “In case of interruption of operations of H on account of epidemics, pandemics or any other public health crisis, the contract will be suspended until the crisis is declared to be over by the government and thereafter pending contractual obligations shall resume.”
Three months were left on the contract when there was a highly contagious virus outbreak in the city, which caused restaurant owners (including H) to suspend operations. Once the outbreak was declared to be over six months later, H refused to purchase raw materials from S arguing that he was discharged from obligations under the contract.
Updated On: Aug 4, 2024
- H is discharged from his obligations because the virus outbreak was a supervening event which changed the nature of contractual rights and obligations
- H is not discharged from his obligations because the contract contained a provision dealing with outbreaks. Further the parties could have reasonably contemplated the occurrence of an outbreak
- H is not discharged from his obligations because the contract had ended by the time the virus was declared to be over
- H is discharged from his obligations because the outbreak is likely to have affected his business badly
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The Correct Option is B
Solution and Explanation
The correct option is (B) : H is not discharged from his obligations because the contract contained a provision dealing with outbreaks. Further the parties could have reasonably contemplated the occurrence of an outbreak.
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