Section 79 : Contracts need not executed in the event of fundamental changes in the situation

1) In case it becomes impossible to execute a contract as a result of fundamental change in the situation prevailing at the time of signing of the contract, the work under the contract need not be performed.

2) Without prejudice to the generality of sub-section (1), fundamental change shall be deemed to have come in the situation prevailing at the time of signing of the contract in any of the following circumstances:

(a) In case the contract becomes illegal and it can not be executed,

(b) In case it becomes impossible to execute the contract due to the emergence of such situations as war, floods, landslides, fire, earthquakes, and volcanic eruptions, which are beyond the control of human beings,

(c) In case anything essential for executing the contract is destroyed or damaged, or no longer exists, or can not be obtained;

(d) In case the contract has been signed with a provision to provide services on the basis of efficiency, skill or talent, and the person providing such service dies or loses his/her sense or becomes incapable of performing the contract because of physical or mental disability.

3) Notwithstanding anything contained in sub-section (2), fundamental changes shall not be deemed to have come in the situation prevailing at the time of signing the contract in any of the following
circumstances:

(a) In case it becomes difficult to perform the contract;

(b) In case the profit margin is low or loss is expected;

(c) In case any party to a contract is dependent upon any third party who is not a party to the contract for performing the contract if the third party commits a mistake or becomes unfit;

(d) In the event of strikes and lockouts;

(e) In case it becomes necessary to pay additional tax, fee or other revenue;

(f) In case the contract has been signed with several objectives and only some of them can not be fulfilled.

4) In case it becomes impossible to execute a contract because of fundamental changes in the situation, as mentioned in sub-section (2), action in the following matters shall be taken as follows:

(a) The amount paid by one party to the other in consideration of the contract before such a change in the situation occurs shall be refunded to the other party.

(b) Payment to be made or due from one party to the other in consideration of the contract shall not be made after such a change in the situation.

(c) In case any party has performed any work or paid any amount before such a change in the situation, such work or amount shall be calculated, and the amount to be paid to each other should be determined, and reasonable expenses incurred by one party in consideration of the contract may be recovered from the other party.

5) Notwithstanding anything contained in this Section, after the end of the situation mentioned in Clause (b) of Sub-section (3), the parties to a contract may agree to fulfil their respective obligations by executing the contract.