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

Vihaan Constructions agreed to build a warehouse for Surya Estates for Rs 50 lakh. Vihaan was ready and willing to start, but Surya Estates refused to give access to the site. Vihaan has not been paid anything. What is the legal position?

The contract is voidable at Vihaan's option. Under the Indian Contract Act, 1872, when one party to reciprocal promises prevents the other from performing, the prevented party may rescind and is entitled to compensation for any loss sustained because of the non-performance.

  1. AThe contract is void automatically and Vihaan has no remedy
  2. BThe contract is voidable at Vihaan's option, and if it rescinds, Vihaan may claim compensation for loss from Surya EstatesCorrect
  3. CThe contract is voidable at Surya Estates' option because it failed to perform
  4. DThe contract continues and Vihaan can claim only the contract price without any option to rescind

Explanation

Where reciprocal promises exist and one party prevents the other from performing, the contract becomes voidable at the option of the party so prevented. That party is entitled to compensation for loss sustained due to non-performance. The option lies with Vihaan, not with the party who caused the prevention.

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