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CS Professional · Drafting, Pleadings and Appearances · Commercial Contract Management

Under a works contract, Zenith Builders was ready to build a warehouse for Patel Industries for Rs 40 lakh, but Patel denied access to the site. Zenith rescinds. Which statement is correct under the Indian Contract Act, 1872?

The contract is voidable at Zenith's option under Section 53, because Patel prevented performance. If Zenith rescinds, it can still recover compensation for any loss caused by the non-performance.

  1. AThe contract is void from the start and Zenith can claim nothing
  2. BThe contract is voidable at Zenith's option, and on rescission Zenith can recover compensation for loss from non-performanceCorrect
  3. CZenith can recover compensation only if it does not rescind
  4. DThe contract continues and Zenith must complete the work

Explanation

Section 53 makes a contract with reciprocal promises voidable at the option of the party prevented from performing, who is entitled to compensation for loss sustained. The illustration expressly allows recovery if he elects to rescind.

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